Cloudera to Go Private: KKR & CD&R Acquire for $5.3B

Cloudera to Go Private in $5.3 Billion Deal

Cloudera, formerly a prominent Hadoop startup, has agreed to be acquired by private equity firms KKR and Clayton, Dubilier & Rice for $5.3 billion. This move signifies a shift in the big data landscape, as the company’s market capitalization currently stands around $3.7 billion.

Merger and Investor Influence

In 2018, Cloudera merged with Hortonworks, another key player in the Hadoop ecosystem, in a deal valued at $5.2 billion. The sale to KKR and CD&R represents a 24% premium for shareholders, with an offer price of $16 per share.

Activist investor Carl Icahn, who acquired an 18% stake in Cloudera in 2019, is poised to benefit from this transaction. Prior to today’s announcement, the stock traded at $12.86.

The Evolution of Big Data

A decade ago, Hadoop was considered the leading solution for processing large datasets, attracting significant venture capital investment. However, its complexity and labor-intensive nature led to a decline in its prominence.

Companies increasingly migrated to cloud-based solutions and software services that automated more of the data processing tasks. Newer technologies, such as data lakes, emerged as alternatives.

Cloudera’s Strategic Shift

Cloudera CEO Rob Bearden views the privatization as an opportunity to adapt to the evolving data processing market. He believes the support of CD&R and KKR will provide the necessary resources and flexibility for product-led growth.

Essentially, the company anticipates that these private equity firms will bolster its financial capabilities to pursue a more contemporary approach to handling substantial data volumes.

Recent Acquisitions

To facilitate this modernization, Cloudera recently acquired two startups. Datacoral, which simplifies data pipeline creation without requiring coding, was among the purchases.

The company also acquired Cazena, a startup specializing in building cloud data lakes, further enhancing its capabilities in modern big data processing.

Bearden emphasized that these acquisitions will reduce complexity and accelerate time to value for customers, leading to improved insights and innovation.

Initial Public Offering and Intel’s Investment

Cloudera went public in 2018, closing at $18.09 per share after raising $1 billion. A significant portion of this funding, $740 million, came from Intel Capital in 2014.

Notably, Cloudera repurchased Intel’s stake in the company at the end of last year for $314 million.

The Fate of Other Hadoop Startups

Hortonworks secured $248 million in funding, while MapR raised $280 million. However, MapR’s assets were ultimately sold to HPE in 2019 for less than $50 million, illustrating the market’s decline.

Deal Details and Future Outlook

The agreement includes a “go shop” provision, allowing Cloudera to explore alternative offers. However, it is unlikely a more favorable deal will emerge.

The transaction with KKR and CD&R is expected to finalize in the second half of the year, pending regulatory approvals. Cloudera is scheduled to release its earnings report later today.