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Cloudera and Hortonworks jointly announced that they have entered into a definitive agreement under which the companies will combine in an all-stock merger of equals.

Considering that both already are at leader in the Big Data world, the transaction, which has been unanimously approved by the Boards of Directors of both companies, will create the biggest company in this area with the declared scope to build the world’s leading next generation data platform provider, spanning multi-cloud, on-premises and the Edge.

Both companies have build a successful OpenSource strategy and both are leader in the Hadoop distributions, but also provide values with their other products, the training, the consultant activities, ….

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 October 1, 2018.  The companies have a combined fully-diluted equity value of $5.2 billion based on closing prices on October 2, 2018.

The deal expected to generate significant financial benefits and improved margin profile:

  • Approximately $720 million in revenue
  • 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

Of course, don’t expect the deal to close for several months. They both will undergo the normal regulatory review that any merger of scale involving public companies gets, and the shareholders from both companies will have to meet and approve the deal.

Customers who are running CDH, HDP and HDF are getting a new promise. Those product lines will each be supported and maintained for at least three years from the date our merger closes. Any customer who chooses either can be sure of a long-term future for the platform selected.

Over the long term, they will move from the single platforms (Hortonworks version 3 and Cloudera version 6 both shipped this past summer) to a a single coherent platform thato includes all the features we each had developed separately, so that customers can safely upgrade from their current Hortonworks or Cloudera installations to the new product.

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 capitalize on the value of their data.”

Note that it’s not clear the name of the new company and neither the future of the DataWorks Summit event organized by Hortonworks.

But the DataWorks Summit dates for 2019 are already announced and for sure those events will give more information about the new company and it vision:

  • Melbourne – February 6
  • Barcelona – March 18-21
  • Washington – May 20-23
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