IBM to acquire HashiCorp for $6.4bn

Pending approval from HashiCorp shareholders and regulators

IBM has confirmed it is to buy cloud infrastructure software firm HashiCorp by the end of 2024.

"HashiCorp has a proven track record of enabling clients to manage the complexity of today's infrastructure and application sprawl," said IBM CEO Arvind Krishna in a statement on Wednesday.

Although the deal will take time to close, IBM said it expects "that the transaction will be accretive to adjusted EBITDA within the first full year, post close, and free cash flow in year two."

Both companies' boards have approved the deal, but it still needs approval from HashiCorp shareholders and regulators—although HashiCorp's largest shareholders and investors, collectively holding about 43% of the voting power of the company's outstanding common stock, have "agreed to vote all of their common shares in favour of the transaction and against any alternative transactions," according to IBM.

Media reports of IBM and HashiCorp nearing a deal surfaced Tuesday. A report on San Francisco-based publicly traded HashiCorp exploring a sale previously emerged in March.

HashiCorp's automation capabilities for infrastructure and security life-cycle management and system of record for hybrid and multi-cloud critical workflows made the vendor stand out, according to the IBM statement.

IBM called Terraform "the industry standard for infrastructure provisioning in these environments" and said that HashiCorp should complement IBM's work in expanding partnerships with hyperscaler cloud service providers and developer communities while innovating open source hybrid cloud and AI technologies.

HashiCorp's technology should complement IBM subsidiary Red Hat, IBM AI platform Watsonx, the vendor's consulting arm and its offerings in data security and IT automation.

Users can combine Red Hat's Ansible Automation Platform configuration management and Terraform's automation to simplify application provisioning and configuration across hybrid cloud environments, in one example, according to IBM.

Armon Dadgar, HashiCorp co-founder and CTO, said in the IBM statement that joining the tech giant will "accelerate HashiCorp's mission and expand access to our products to an even broader set of developers and enterprises."

HashiCorp CEO Dave McJannet said that IBM is "the ideal home for HashiCorp as we enter the next phase of our growth journey."

In HashiCorp's statement about the acquisition, written by Dadgar, the company said that it "will continue to build products and services as HashiCorp, and will operate as a division inside IBM Software."

"By joining IBM, HashiCorp products can be made available to a much larger audience, enabling us to serve many more users and customers," according to the HashiCorp statement. "For our customers and partners, this combination will enable us to go further than as a stand-alone company."

On 5th March, HashiCorp reported a net loss of $48.3 million for its fourth fiscal quarter, using GAAP. The loss was an improvement of about 36% year-over-year.

Some positive measures from the most recent quarterly earnings for the 2024 fiscal year include $583.1 million reported in revenue, an increase of 23% year-over-year. Remaining performance obligation was $775.8 million in the fourth fiscal quarter, up about 20% year-over-year.

HashiCorp, founded in 2012, has more than 4,000 customers, according to IBM.

This article was first published on CRN