Cloudera and Hortonworks announce $5.2 billion merger
Over the years, Hadoop, the once high-flying open source platform, gave rise to many companies and an ecosystem of vendors emerged. It was long believed that some major companies would emerge from the pack and sure enough Hortonworks went public in 2014. Cloudera followed three years later, but the market slowed down and the two companies announced today that they are merging in a deal worth $5.2 billion, based on the price at the close of business yesterday.
Part of the problem with Hadoop, even though anyone could download it, was the sheer complexity of it. That’s where companies like Hortonworks and Cloudera came in. They packaged it for IT departments who wanted the advantage of a big data processing platforms, but didn’t necessarily want to build Hadoop from scratch.
These companies offered different ways of helping to attack that complexity, but over time with all the cloud-based big data solutions, rolling a Hadoop system seemed futile, even with the help of companies like Cloudera and Hortonworks.
In an interview in 2017, Carl Oloff, an analyst at IDC described the differences between the two companies, differences that may help them now as they become a single company.
Olof described Hortonworks as a “pure open source company,” one that packages, coordinates and manages that open source as a product for a subscription fee, and also sells support. He [said] the company’s products are aimed mostly at “big data technologists.”
Cloudera is a bit different, he said. “[It] offers packages that are mostly open source, but with tooling that is proprietary, and that are aimed at various classes of business problems. They sell to business managers. So their approach is different, and as a result, they have a higher percentage of their income derived from software than does Hortonworks,” Olofson told TechCrunch.
Sometimes the best answer to a fragmented market is coming together and that’s exactly what the two companies did today. The deal involves an all-stock merger in which each partner gets equal ownership, according to a statement announcing the deal.
Tom Reilly, the long-time CEO at Cloudera certainly sees the two companies as complementary, offering customers something together that they couldn’t separately. “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,” Reilly said in a statement.
As you might imagine, Hortonworks chief executive Rob Bearden concurred. “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,” he said in a statement.
The combined companies will boast 2500 customers, $720 million in revenue and $500 million in cash with no debt, according to the companies.
Cloudera, which was founded in 2008, raised over a billion dollars before going public, the vast majority coming in one major $740 million burst from Intel Capital in 2014. Hortonworks, founded three years later raised $248 million.