Cloudera, Hortonworks Plan to Merge as $5.2B Cloud Data Platform

Cloudera and Hortonworks, two large, publicly traded companies that compete to offer Web-based data storage and analytics, announced plans today to merge into a combined entity they value at $5.2 billion.

Share prices for the two Silicon Valley companies spiked in after-hours trading following the announcement Wednesday that both their boards approved the all-stock deal. Palo Alto, CA-based Cloudera (NYSE: CLDR) and Santa Clara, CA-based Hortonworks (NASDAQ: HDP) said they expect the merger to close during the first quarter of 2019 if it passes an antitrust review.

The goal of the combined entity is to provide a leading data platform that builds on what the companies describe as their complementary strengths: Hortonworks in data management and Cloudera in data storage and advanced analytics using machine learning software. Both companies developed services based on the Hadoop open-source software designed to manage and draw insights from large data sets.

While an antitrust review would weigh whether the merger of the two rivals could decrease competition to the detriment of customers, Business Insider’s Nick Bastone wrote Wednesday that other tech heavyweights, including Amazon, Microsoft, Google, and Oracle, have already become players in the field.

According to TechCrunch’s Ron Miller, the market had slowed for both the big Silicon Valley companies commercializing Hadoop technology, given the emergence of other big data platforms.

The proposed merger comes at a time when Web-based data platforms are offering customers the ability to use artificial intelligence software to analyze data distributed among their own data centers as well as multiple cloud storage options. These platforms are also extending the reach of cloud computing to distributed “edge clouds” located close to where data is generated by mobile devices and machines. In the statement announcing the deal, Hortonworks CEO Rob Bearden said the merger would position the combined entity to grow and compete in streaming video and the Internet of Things—two fields where edge computing is being tested for its ability to increase the speed of data transmission.

If the merger goes through, Cloudera CEO Tom Reilly will become the chief executive officer of the blended company, and Bearden will join its board of directors. Cloudera shareholders will own about 60 percent of the equity of the merged company, while Hortonworks shareholders will own the remaining shares. Hortonworks shareholders will receive 1.305 common shares of Cloudera for each share of Hortonworks stock they own. The multiplier derives from a calculation of the ratio between the two companies’ share prices over 10 days through October 1.

Photo credit: Cumulonimbus cloud by Bernard DUPONT via Flickr, used under a CC BY-SA 2.0 license.

Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy

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