Cloudera and Hortonworks Merged

Cloudera, Inc. and Hortonworks, Inc. have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals.

The transaction, which has been approved by the boards of directors of both companies, will a leading data platform provider, spanning multi-cloud, on-premises and the Edge. The combination establishes the industry standard for hybrid cloud data management, accelerating customer adoption, community development and partner engagement.

Tom Reilly, CEO, Cloudera, stated: “Our businesses are highly complementary and strategic. By bringing together Hortonworks’ investments in end-to-end data management with Cloudera’s investments in data warehousing and machine learning, we will deliver the industry’s first enterprise data cloud from the Edge to AI. This vision will enable our companies to advance our shared commitment to customer success in their pursuit of digital transformation.”

“This compelling merger will create value for our respective stockholders and allow customers, partners, employees and the open source community to benefit from the enhanced offerings, larger scale and improved cost competitiveness inherent in this combination,” said Rob Bearden, CEO, Hortonworks. “Together, we are well positioned to continue growing and competing in the streaming and IoT, data management, data warehousing, machine learning/AI and hybrid cloud markets. Importantly, we will be able to offer a broader set of offerings that will enable our customers to capitalize on the value of their data.”

Under the terms of the transaction agreement, Cloudera stockholders will own approximately 60% of the equity of the combined company and Hortonworks stockholders will own approximately 40%. Hortonworks stockholders will receive 1.305 common shares of Cloudera for each share of Hortonworks stock owned, which is based on the 10-day average exchange ratio of the two companies’ prices through October 1, 2018. The companies have a combined fully-diluted equity value of $5.2 billion based on closing prices on October 2, 2018.

Transaction Highlights
• Establishes the next generation data platform leader with increased scale and resources to deliver the an enterprise data cloud, providing the ease of use and elasticity of the public cloud from the data center, to the Edge and everywhere in between
• Creates an unified platform and industry standard from the Edge to AI, substantially benefiting customers, partners and the community
• Accelerates market development and fuels innovation in IoT, streaming, data warehouse, hybrid cloud, machine learning/AI
• Expands market opportunity with complementary offerings, including Hortonworks DataFlow and Cloudera Data Science Workbench
• Enhances partnerships with public cloud vendors and systems integrators
• Expected to generate significant financial benefits and improved margin profile:

• Approximately $720 million in revenue for the twelve month period ended 2QCY18 and 2QFY19
• More than 2,500 customers
• More than 800 customers over $100,000 ARR
• More than 120 customers over $1 million ARR
• More than $125 million in annual cost synergies
• More than $150 million cash flow in CY20
• Over $500 million cash, no debt

Management and board of directors
Following completion of the transaction, Cloudera’s CEO, Tom Reilly, will serve as CEO; Hortonworks’ COO, Scott Davidson, will serve as COO; Hortonworks’ chief product officer, Arun C. Murthy, will serve as chief product officer; and Cloudera’s CFO, Jim Frankola, will serve as CFO, of the combined company. Hortonworks’ CEO, Rob Bearden, will join the board of directors. Current Cloudera board member, Marty Cole, will become COB of directors.

The board of directors of the newly-formed company will initially comprise nine directors. Four directors, including Bearden, will come from Hortonworks’ existing board of directors. Five directors, including Reilly, will come from Cloudera’s existing board of directors. A tenth director will be selected by the combined board.

A majority of the board of directors will be independent under New York Stock Exchange standards.

Approvals and Time to Close
The transaction is subject to Cloudera and Hortonworks stockholder approval, U.S. antitrust clearance and other customary closing conditions. Directors and executive officers of Cloudera and Hortonworks, as well as affiliated entities, have each agreed to vote shares held by them in favor of the transaction. The companies expect to complete the transaction during the first quarter of calendar year 2019.

Advisors
Morgan Stanley & Co. LLC is serving as financial advisor to Cloudera, and Fenwick & West LLP is serving as its legal advisor. Qatalyst Partners is serving as financial advisor to Hortonworks, and Latham & Watkins LLP is serving as its legal advisor.

Read also:
Cloudera: Fiscal 2Q19 Financial Results
69 customers exceeding $1 million of annual recurring revenue, representing half of software revenue
2018.09.07 | Press Release | [with our comments]
Hortonworks Reports Second Quarter 2018 Revenue of $86.3 Million