close
close
Skip to content

IBM acquires HashiCorp for multi-billion dollar cloud expansion

Top 5 Tokens to Pump in 2024

IBM to acquire HashiCorp in multi-billion dollar cloud expansion (1)Technology giant IBM is acquiring HashiCorp in a multi-billion dollar cloud expansion

IBM And Hashi Corp Inc., a leader in multi-cloud infrastructure automation, announced yesterday via a definitive agreement, stating IBM acquires HashiCorp Inc. for $35 per share in cash, insinuating an enterprise value of $6.4 billion. IBM acquires HashiCorp for billions of dollars cloud expansion, read on to learn more about this acquisition. HashiCorp products provide organizations with a range of IaaS automation for hybrid and multi-cloud environments. With IaaS, organizations can manage their security lifecycle management and infrastructure lifecycle management in dream mode. Today’s announcement is the model example of true distributed, hybrid cloud and AI-based processing that customers rely on most.

Arvind Krishna, chairman and CEO of IBM, said: “Enterprise customers are grappling with unprecedented infrastructure and application expansion across public and private clouds, as well as on-prem environments. The global excitement around generative AI has exacerbated these challenges and CIOs and developers are facing dramatic complexity in their technical strategies.” “HashiCorp has a proven track record of enabling customers to manage the complexity of today’s infrastructure and application proliferation. Combining IBM’s portfolio and expertise with HashiCorp’s capabilities and talent creates a comprehensive hybrid cloud platform designed for the AI ​​era.”

The development of cloud-based workloads and applications has dramatically changed the number of cloud workloads that enterprises deal with on a daily basis. Furthermore, requests for AI inference are increasing at par with normal computing usage and actual performance. Therefore, they are now confronted with a variety of no less dynamic and complex infrastructure methods that cannot easily be seen as an end-to-end process pipeline, which is a huge challenge for big data implementers.

HashiCorp’s technical components have the flexibility to support automation for critical use cases, along with tracking the vital workflow, security lifecycle, and infrastructure required for the hybrid cloud expansion operating model. Hashicorp’s Terraform has a reputation as the go-to tool for delivering infrastructure in these types of environments. Open source and collaborative in nature, HashiCorp’s offering helps customers adopt a highly interoperable and cloud-agnostic multi-cloud approach, adding yet another brick to IBM’s initiative to work closely with hyperscale cloud providers, developer communities and hybrid cloud deployments. that support AI.

HashiCorp co-founder Armon Dadgar said: “At its core, our strategy is about enabling companies to innovate in the cloud, while providing a consistent approach to managing the cloud at scale. The need for effective management and automation is critical with the rise of multi-cloud and hybrid cloud, accelerated by today’s AI revolution.”

Transaction reason

IBM’s acquisition of HashiCorp provided the final solution, creating a complete cloud platform for AI-driven complexity. The synergy of each partner’s specific skills transforms customers’ capabilities and enables them to cover a broad area including tools, hardware and network security management.

The acquisition of HashiCorp is expected to generate significant synergies for IBM within core focus areas such as Red Hat, Watsonx, Data Security, IT Automation and Consulting. Similar to the effective combination of the administrative action of the Ansible Automation Platform and the full automation of Terraform, creating and configuring apps in a hybrid cloud would be simplified. The two companies expect rapid growth from HashiCorp’s existing initiatives, which will be achieved using IBM’s prominent go-to-market playbook, breadth and reach, which is present in more than 175 countries around the world.

The acquisition will enable the organization to present more complete hybrid and multi-cloud markets to its enterprise customers. HashiCorp’s package, along with an acceptance from both IBM and Red Hat, will enable customers to own a platform for automating the deployment and management of workloads at the scale of cloud service providers, on-premises IT environments and private clouds. This will ensure that IBM’s cloud offering more efficiently addresses the overall cloud opportunity, which, as shown in the IDC study, had a total addressable market worth $1.1 trillion in 2023, with high CAGR rates through 2027 .

With IBM acquiring HashiCorp, the deal will ultimately strengthen IBM’s position as a market leader by joining forces at the marketing and product level. This is the case because it is very likely that this will result in a substantial margin increase for the acquired company in the short term. The efficiency will be an added value. Due to the free cash flow in the second year, the deal is expected to be accretive to Adjusted EBITDA within the full year after closing.

Hashicorp has more than 4,400 customers, including Bloomberg, Comcast, Deutsche Bank, GitHub, JP Morgan Chase, Starbucks and Vodafone. With IBM acquiring HashiCorp, the prevalence of HashiCorp’s offering in the developer community and its adoption by 85% of the Fortune 500 speak volumes about the company’s strong market base. HashiCorp’s infrastructure and security community products have been downloaded more than 500 million times in FY 2024, including their infrastructure and security community products.

Terraform: It is an organizational tool that allows them to train the workflow of cloud, private data center and SaaS facilities and continuously manage the infrastructure throughout its lifecycle.

Safe: It is a tool used by organizations to ensure domain-based security. It works as a guard for automatic authentication and authorization of access to secrets and other sensitive data.

Additional products: These include the remote access Boundary, Consul service mesh, workload orchestration Nomad, image management code using Packer, and an internal developer platform, all Waypoint.

transaction details

Under the terms of the agreement, IBM will buy Hashicorp for $35 per share in a cash deal, valuing the company at $6.4 billion in cash enterprise value. IBM will buy HashiCorp with cash.

The boards of directors of IBM and Hashicorp have both approved the deal. The purchase is subject to the opinion of HashiCorp shareholders, regulatory clearances and customary closing conditions.

It is interesting to note that HashiCorp’s largest shareholders and investors, whose ownership includes approximately 43% of the voting rights relating to HashiCorp’s outstanding common stock, have entered into a voting agreement with IBM. Under the agreement, they each signed a pledge to vote all of their common stock in favor of the transaction and against all other alternative transactions.

Furthermore, the closing date of the transaction is expected in late 2024, meaning the seizure could be completed in the coming days.

Conclusion:

IBM’s acquisition of HashiCorp is a monumental strategic step in the multibillion-dollar multinational’s efforts to dominate the cloud computing industry. By introducing HashiCorp’s modern infrastructure automation offering to its product line, IBM aims to enhance its facilities to handle the diversity of cloud environments in a functional manner and within a short time frame. This acquisition not only helps IBM position itself in the dynamic cloud space, but also sends the message that it must remain committed to exploring new options and solutions for global enterprises.