Palo Alto, Calif. and Santa Clara, Calif., 05 Oct 2018
* Establishes a superior unified platform and clear industry standard from the edge to AI.
* Strategic combination accelerates market development, fuels innovation and produces substantial benefit for customers, partners and community.
Cloudera (NYSE: CLDR) and Hortonworks (Nasdaq: HDP) jointly announced today they have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals. The transaction, which has been unanimously approved by the boards of directors of both companies, will create the world's leading next-generation 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, chief executive officer at 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, chief executive officer of 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 capitalise 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 1 October 2018. The companies have a combined fully diluted equity value of $5.2 billion based on closing prices on 2 October 2018.
Transaction highlights
* Establishes the next-generation data platform leader with increased scale and resources to deliver the industry's first enterprise data cloud, providing the ease of use and elasticity of the public cloud from the data centre, to the edge, and everywhere in between
* Creates a superior unified platform and clear 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 [1];
* 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; and
* Management and board of directors.
Following completion of the transaction, Cloudera's Chief Executive Officer, Tom Reilly, will serve as Chief Executive Officer; Hortonworks' Chief Operating Officer, Scott Davidson, will serve as Chief Operating Officer; Hortonworks' Chief Product Officer, Arun C Murthy, will serve as Chief Product Officer; and Cloudera's Chief Financial Officer, Jim Frankola, will serve as Chief Financial Officer of the combined company. Hortonworks' Chief Executive Officer, Rob Bearden, will join the board of directors. Current Cloudera board member, Marty Cole, will become Chairman of the board 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, US 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 favour of the transaction. The companies expect to complete the transaction during the first quarter of calendar year 2019.
Advisors
Morgan Stanley & Co is serving as financial advisor to Cloudera, and Fenwick & West is serving as its legal advisor. Qatalyst Partners is serving as financial advisor to Hortonworks, and Latham & Watkins is serving as its legal advisor.
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