IBM to Acquire HashiCorp in $6.4 bn Deal, Boosting Cloud-Based Software Portfolio

International Business Machines (IBM) has announced its intention to acquire HashiCorp in a deal valued at $6.4 billion.
This move aims to bolster IBM’s cloud-based software offerings, tapping into the demand fueled by the rapid expansion of artificial intelligence (AI) applications.

IBM believes that the acquisition of HashiCorp represents a strategic step towards enhancing its software capabilities, leveraging the growing momentum in cloud-based solutions.

HashiCorp has more than 4,400 clients, including Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone. HashiCorp earlier revealed it expects revenue of $643 – $647 million for fiscal year 2025.

“In fiscal 2025, we are doubling down on initiatives to simplify our go-to-market, improve our product monetization, and focus our business on the HashiCorp Cloud Platform. These efforts will help us reaccelerate our revenue growth in the new fiscal year,” Dave McJannet, CEO, HashiCorp, said in its earnings report in March.

HashiCorp’s offerings have widescale adoption in the developer community and are used by 85 percent of the Fortune 500. HashiCorp’s community products across infrastructure and security were downloaded more than 500 million times in HashiCorp’s FY2024.

IBM will pay $35 per share for HashiCorp, marking a significant 42.6 percent premium to Monday’s closing price, Reuters news report said.

IBM’s CFO Jim Kavanaugh said the uncertain macroeconomic environment has led clients to tighten discretionary spending, a trend echoed in the consulting sector as well. Competitors like Accenture have also faced challenges, as evidenced by their fiscal-year 2024 revenue forecast reduction due to reduced client spending on consulting services.

However, IBM’s software business saw growth of 5.5 percent in the first quarter, underlining the company’s commitment to the cloud business, particularly in the AI. The acquisition of HashiCorp is expected to contribute positively to IBM’s adjusted core profit within the first full year of closing, anticipated by the end of 2024.

Based in California, HashiCorp specializes in enabling customers to establish and manage their cloud infrastructures, making it a strategic addition to IBM’s portfolio. Stephen Elliot, a vice president at market research firm International Data Corp, lauded the deal, noting that IBM is acquiring a leader in the field, which complements its existing offerings.

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