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Cloudera, Inc. (NYSE: CLDR) and Hortonworks, Inc. (Nasdaq: HDP) are in the process of finalizing an agreement that will merge into 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, multi-cloud spanning, on-premises and the Edge. The combination of 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 be used 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," said Rob Bearden, chief executive officer of Hortonworks. "Together we are continuing to grow and competing in IoT streaming, 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 us to capitalize on the value of their data. "
Under the terms of the transaction agreement, Hortonworks will own approximately 40% of the equity. 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 rate of the two companies' prices through October 1, 2018. The companies have a fully-diluted diluted equity value of $ 5.2 billion based on closing prices on October 2, 2018.
Transaction Highlights
- Establish the next generation of cloud computing data, supplying the world of cloud computing, providing the ease of use and elasticity of the cloud market, 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, cloud hybrid, machine learning / AI
- Expands market opportunity with complementary offerings, including Hortonworks DataFlow and Cloudera Data Science Workbench
- Enhances partnerships with the public cloud vendors and systems integrators
- Expected to generate significant financial benefits and improved margin profile:
- Approximately $ 720 million in revenue1
- 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 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 include nine directors. Four directors, including Mr. Bearden, will come from Hortonworks' existing board of directors. Five directors, including Mr. 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 of 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. The companies expect to complete the transaction during the first quarter of calendar year 2019.
Advisors
Morgan Stanley & Co. LLC is serving as a financial advisor to Cloudera, and Fenwick & West LLP is serving as its legal advisor. Qatalyst Partners is serving as a financial advisor to Hortonworks, and Latham & Watkins LLP is serving as its legal advisor.
Investor Conference Call and Webcast
Cloudera and Hortonworks will host an investor conference call and webcast to discuss the proposed merger at 2:00 PM Pacific Time. To access the call:
Domestic: (866) 547-1509
International: (920) 663-6208
Conference ID: 6956379
Cloudera's Investor Relations website at https://investors.cloudera.com/ and Hortonworks' investor relations website at http://investors.hortonworks.com.
(404) 537-3406. The access code for the replay is 6956379.
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