IBM Completes HashiCorp Acquisition for $6.4 Billion

IBM Completes HashiCorp Acquisition

IBM has officially concluded its acquisition of HashiCorp, a deal valued at several billion dollars. This follows approval from the U.K.’s competition regulator earlier this week.

A representative from IBM verified to TechCrunch that the U.S. Federal Trade Commission (FTC) had also approved the acquisition. This clearance occurred shortly before the U.K.’s Competition and Markets Authority (CMA) gave its consent on Tuesday.

Deal Timeline and HashiCorp's Focus

The announcement marks ten months since IBM initially announced its intention to acquire HashiCorp for $6.4 billion. HashiCorp is an enterprise software provider, widely recognized for Terraform.

Terraform is an “infrastructure-as-code” tool designed to automate the provisioning and management of infrastructure across multiple cloud environments.

The Terraform License Change

Originally released under an open-source license, Terraform underwent a controversial shift to a proprietary license in 2023. This change prompted the creation of a community-led alternative known as OpenTofu.

The alteration in licensing likely increased HashiCorp’s attractiveness as an acquisition target. It provided potential buyers with greater control over the utilization of Terraform within the industry.

Strategic Alignment with IBM

Terraform’s capabilities in infrastructure provisioning – configuring hardware, software, and network components for applications and services – align with IBM’s evolving strategy.

IBM’s strategy has transitioned from on-premises systems to cloud solutions, and this acquisition appears to be contributing to its success. The company can now better serve clients needing to manage infrastructure both on-site and within cloud platforms.

IBM's Ascending Valuation and Strategic Acquisitions

IBM, a long-standing leader in the software industry, is experiencing significant growth fueled by advancements in artificial intelligence and cloud computing. The company’s valuation recently reached a record high, exceeding $240 billion this year.

The integration of HashiCorp into IBM’s portfolio is expected to strengthen its position in the hybrid cloud market. This acquisition will provide IBM with enhanced capabilities in this crucial area.

Expanding Cloud Infrastructure Capabilities

According to IBM executive Rob Thomas, organizations worldwide are prioritizing the deployment of modern applications designed for hybrid cloud environments. These applications necessitate scalable, automated cloud infrastructure.

Thomas stated that IBM is dedicated to expanding the capabilities of HashiCorp and leveraging its technology alongside IBM’s resources. The goal is to integrate HashiCorp’s technology into every data center globally.

A Series of Strategic Investments

This acquisition follows a pattern of substantial investments by IBM. In 2019, IBM completed the $34 billion acquisition of Red Hat.

Furthermore, in 2023, the company invested $4.6 billion in Apptio. This week, IBM also announced its intention to acquire DataStax, the vendor behind Apache Cassandra, for an undisclosed amount.

Navigating Regulatory Approvals

Initially, IBM anticipated finalizing the HashiCorp acquisition by the close of 2024. However, the process was delayed due to regulatory scrutiny.

A filing with the U.S. Securities and Exchange Commission (SEC) in July revealed that the Federal Trade Commission (FTC) was reviewing the proposed merger.

The U.K.’s Competition and Markets Authority (CMA) also initiated a review in December.

Deal Completion

Following approvals from both the FTC and CMA, IBM was able to finalize the acquisition of HashiCorp within a short timeframe. This clearance removed the final obstacles to the transaction.