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October 3, 2018

Cloudera and Hortonworks to Merge in $5.2 Billion Deal

Cloudera and Hortonworks, the two leading companies backing Hadoop distributions and fierce head-to-head rivals,  today made the unlikely announcement that they plan to merge, creating a single company under the Cloudera banner that will focus on “edge to AI” opportunities.

While Cloudera was the first commercial distributor of Hadoop and employed its creator, Doug Cutting, Hortonworks emerged from Yahoo, where Cutting’s creation first took off. The two companies have been close rivals since Hortonworks emerged in 2011, with MapR Technologies occupying the third rung at the Hadoop table.

“Super stoked about this combination,” tweeted Mike Olson, Cloudera co-founder and chief strategy officer. “I look forward to collaborating closely with the great team at Hortonworks once this transaction closes.”

The transaction agreement calls for Cloudera stockholders to own 60% of the equity of the combined company and Hortonworks stockholders to own approximately 40%. Tom Reilly, the current CEO of Cloudera, will be the CEO of the combined company, which will feature four board members from Hortonworks, and five from Cloudera.

Reception of the merger was mixed.   Some predicted that the combination of the vendors spelled bad news for Hadoop as a business model. Others said that the merger was inevitable between two companies with such similar business models, and that the merger will be among the best things “that ever happened to Hadoop.”

According to Cloudera’s press release on the deal, the combined company will have $720 million in combined revenues, 2,500+ customers, more than $500 million in cash, and no debt (venture capital investments not withstanding). Based on the stock valuations of the two companies at close today, the deal is valued at $5.2 billion. The companies said they expect the transaction to close in early 2019.

“Our businesses are highly complementary and strategic,” Reilly stated in a press release. “By bringing together Hortonworks’ investments in end-to-end data management with Cloudera’s investments in data warehousing and machine learning, we will deliver the industry’s first enterprise data cloud 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.”

Rob Bearden, the current CEO of Hortonworks, says the “compelling merger” has something for all stakeholders, including stockholders, customers, partners, employees ,and the open source community.

“Now is the time for us to accelerate our growth and Cloudera is the right organization to join us as we embark on the next chapter of our evolution,” Bearden wrote in a blog post. “We are confident that our combined company will be ideally positioned to redefine the future of data as we extend our leadership and expand our offerings.”

Stocks for Hortonworks, which went public in December 2014 under the NASDAQ symbol HDP, were up more than 23% in after-hours trading. Stocks for Cloudera, which went public in April 2017 under the NYSE symbol CLDR, were also up more than 23% in after-hours trading.

Related Items: 

Mike Olson on Zoo Animals, Object Stores, and the Future of Cloudera

Hortonworks Handily Beats Analyst Estimates

Cloudera IPO Lauded by Big Data Community