Market data:

A New Merger in IoT Land: Cloudera and Hortonworks

It has been a long time since the last M&A action in our IoT strategy, the type of activity that was a trademark of this portfolio in its first year. 

However, today we are witnessing positive action in our Cloudera (CLDR) position after the announcement of its intent to merge with strong competitor Hortonworks.  In a day in which risky assets are out of favor and especially tech is taking it on the chin, the market seems to approve of such merger bidding up significantly Cloudera and Hortonworks (HDP).

The terms of the merger indicate that HDP stockholders will receive 1.305 shares of CLDR for each share of HDP owned.  CLDR shareholders will own approximately 60% of the combined company.  The merger is expected to close in the first quarter of 2019.

CLDR and HDP will continue to support their individual platforms as they work toward the issuance of a “unity release” that will combine IoT ingestion and streaming (HDP trademark) and data science and analytics (CLDR competence).

The deal provides financial as well as enterprise synergies and it should alter favorably valuations of the two merging companies.  However, some longer term risks remain as some of their competencies have shifted to the public cloud with the result of creating new competitors.