IBM Acquires HashiCorp for $6.4 Billion to Create a Comprehensive Hybrid Cloud Platform

• IBM has bought HashiCorp for $35 per share in cash, with an enterprise value of $6.4 billion.
• HashiCorp boasts a hefty 4,400 clients and a bunch of tools that perfectly complement IBM's long-term goals.
• The deal positions IBM as an ultimate hybrid cloud provider and sets it apart from the competition by allowing it to manage both public and private clouds as well as on-prem environments.

On Wednesday (April 24), IBM announced that it will be buying HashiCorp, a multi-cloud infrastructure automation company in a deal worth $6.4 billion (calculated as $35 per share in cash).

Read more: 40 amazing IBM statistics and facts for 2024

A Little about HashiCorpFounded in 2012, HashiCorp is a software company that offers tools and products for cloud computing infrastructure. What makes its approach unique is that most of its tools are open-source and suited for multi-cloud environments.

Its services include both free and paid options. Some of its most popular products are HashiCorp Terraform, Boundary, Packer, and Nomad. In the last year alone, its products have been downloaded over 450 million times.

Overall, HashiCorp has a massive client base consisting of 4,400 clients, including big names like JP Morgan, Comcast, and Bloomberg. In fact, more than 85% of Fortune 500 companies use HashiCorp's products.

Why Is IBM Investing in HashiCorp

IBM has long realized that it can never compete with Google, Amazon, and Microsoft as a pure cloud infrastructure vendor. That's why it shifted its focus to helping IT departments manage their complex hybrid ecosystems.

In its journey to do so, it started acquiring multiple companies, starting with Red Hat in 2018 for $34 billion and Apptio in 2023-and now it's HashiCorp's turn.

HashiCorp's massive clientele and promising numbers make it a good investment for IBM.

• HashiCorp's revenue in the last quarter was $155.8 million, which was 15% more than the previous year.
• The company's annual revenue last year stood at $583.1 million which is a year-on-year increase of around 23%.

Even its gross profits remained high-GAAP was at $128.8 million and non-GAAP at $133.5 million-meaning the final margin was 83% and 86%, respectively. Last but not least, HashiCorp's operational loss has shown remarkable improvements, too.

GAAP vs non-GAAP: non-GAAP figures do not include non-cash or non-recurring expenses, unlike GAAP figures.

Although these numbers are nothing compared to IBM's, HashiCorp is the perfect fit for IBM's current market strategy. For example, both companies are in favor of open-source platforms which could help broaden IBM's user base.

In addition to that, IBM is focusing on automation, hybrid and multi-cloud infrastructure, and DevOps, all of which HashiCrop already specializes in and has tools for.

And just this week, HashiCorp launched a new platform The Infrastructure Cloud' which will unify all its offerings, making it a perfect fit for IBM's hybrid cloud product catalog.

HashiCorp has a proven track record of enabling clients to manage the complexity of today's infrastructure and application sprawl.' - IBM CEO Arvind Krishna

By teaming up with HashiCorp, IBM will be able to create a comprehensive hybrid cloud platform, which will position it as a leading provider in the space.

The technology acquired from this deal, as well as the tools from Red Hat and IBM's existing resources, will help the company serve people with public clouds, private clouds, as well as on-premises environments. In short, if everything goes as planned, IBM will be unstoppable.

In other news: IBM joins the AI rally with Watsonx, an AI and data platform for business. It simplifies building custom AI applications, managing all data sources, and accelerating responsible AI workflows all on one centralized platform.

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