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Cloudera-Hortonworks: The Win-Win Merger

Cloudera-Hortonworks

A superior unified platform and a clear industry standard from the Edge to AI has been established since the announcement of the merger of Cloudera and Hortonworks. This merger aims to create the World’s Leading Next Generation Data Platform and deliver the Industry’s First Enterprise Data Cloud.

Given the companies’ complimentary assets and specializations, Hortonworks and Cloudera have been discussing a deal for a long time. Both the companies open source with Hadoop Distributions and operate in a similar space, Cloudera also targets data warehouses and Hortonworks provides solutions in edge computing and IoT. This strategic combination will accelerate market development, fuel innovation and produce substantial benefits for customers, partners and the community as a whole.

The Hadoop ecosystem symbolized Big Data in the early days but the last couple of years have witnessed a massive shift in data architecture. Organizations have started heavily investing in server-less computing in order to tackle shifting workloads. The Hadoop market was upended by a major rise in cloud computing, spanning storage, managed services, and open source activity. Since both Hortonworks and Cloudera operate in that same market, this merger means that they can now begin working as a single unit.

Rightly put by Tom Reilly, Cloudera, CEO, the two businesses are highly complementary and strategic. He added that by bringing together the Hortonworks’ investments in an end-to-end data management with Cloudera’s investments in data warehousing and machine learning, they will be able to deliver the first enterprise data cloud of the industry 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.” – Tom

The two data tech companies have a combined fully-diluted equity value of $5.2 billion. Around 60% of the equity will be owned by Cloudera stockholders while the other 40% will be owned by Hortonworks stockholders.

“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,” as said by Rob Bearden, Hortonworks CEO, who will be part of the board of directors in the new firm.

There are many upsides to the Cloudera-Hortonworks merger. The two companies expect to generate

  • $720 million in combined annual revenue
  • 2,500 customers
  • 800 customers over $100,000 ARR (annual recurring revenue)
  • 120 customers over $1 million ARR
  • $125 million in annual cost synergies (that sounds like double-talk for layoffs and cost-cuts, ChannelE2E believes)
  • $150 million cash flow in CY20
  • $500 million cash and no debt

As explained by the CSO of Cloudera, Mike Olson, both companies, since 2011, innovated and built better products to win more business. He went on to address the competitive world of data management, “We can each look with respect at the success of the other. I’m proud of what we’ve done at Cloudera, and I’m impressed at what the team has accomplished at Hortonworks.

Cloudera product CDH and Hortonworks products HDP and HDF will continue to be supported and maintained for at least the next three years after the merger closes. Each of the company’s partners will have access to the larger community of their partner and will also experience the benefit from a single standard to build on along with a larger company with more customers. This merger creates value for stockholders and aids in creating a broader offering for customers.

According to Mike Olson, the merger has not yet become official and the deal would take several months to close. Rob Bearden expects the transaction to wind-up in the first quarter of 2019. Until then, the two companies will be operating separately.

Cloudera

Founded in 2008, Cloudera delivers a modern platform for the purpose of machine learning and analytics that are optimized for the cloud. With offices in 24 countries around the globe, Cloudera was founded by the brightest minds at Silicon Valley including Google (Christophe Bisciglia), Yahoo! (Amr Awadallah), Facebook (Jeff Hammerbacher), and Oracle (Mike Olson). 

Hortonworks

Founded in 2011, Hortonworks is a leading commercial vendor company that focuses on the development and support of Apache Hadoop, the well-known open source platform for storing, managing and analyzing Big Data. Hortonworks Data Platform provides an open and stable foundation for enterprises and is a growing ecosystem to build and deploy Big Data solutions.

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