Thursday, October 4, 2018

Cloudera to merge with Hortonworks, creating a $5.2 billion company

 Cloudera and Hortonworks, the two leading enterprise Hadoop providers, announce Merger to Create World’s Leading Next Generation Data Platform and Deliver Industry’s First Enterprise Data Cloud. According to the companies, the combined entity has a better chance to be a next-gen data platform across multiple clouds, on-premises and Edge computing. Hortonworks and Cloudera also have complementary approaches, customers and industries. They will combine in a merger of equals in a deal valued at $5.2 billion. Both companies were pioneers in Hadoop, an open-source platform that could analyze data in ways that scaled up easily—a necessity during a time when the availability of data was increasing exponentially each year.


First, remember the history of Apache Hadoop.

Google built an innovative scale-out platform for data storage and analysis in the late 1990s and early 2000s, and published research papers about their work. Doug Cutting and Mike Cafarella were working together on a personal project, a web crawler, and read the Google papers. The two of them started the Hadoop project to build an open-source implementation of Google’s system.

Yahoo quickly recognized the promise of the project. It staffed up a team to drive Hadoop forward, and hired Doug Cutting. That team delivered the first production cluster in 2006 and continued to improve it in the years that followed.

In 2008,
Rob Bearden co-founded Cloudera with folks from Google, Facebook, and Yahoo to deliver a big data platform built on Hadoop to the enterprise market. We believed then, and we still believe today, that the rest of the world would need to capture, store, manage and analyze data at massive scale. We were the first company to commercialize the software, building on the work done at Yahoo and other consumer internet companies.

Three years later, the core team of developers working inside Yahoo on Hadoop spun out to found Hortonworks. They, too, saw the enormous potential for data at scale in the enterprise. They had proven their ability to build and deliver the technology at Yahoo.

Hortonworks, which spun out of Yahoo, went public in 2014, and Cloudera, which is larger than Hortonworks in terms of market capitalization and revenue, went public in 2017. Intel was a major Cloudera investor. Amazon's market-leading cloud unit has a distribution of Hadoop software, and another competitor of the companies, MapR, is privately held. Cloudera, which was founded in 2008, raised over a billion dollars before going public, the vast majority coming in one major $740 million burst from Intel Capital in 2014. Hortonworks, founded three years later, raised $248 million.

Tom Reilly, the long-time CEO at Cloudera, certainly sees the two companies as complementary, offering customers something together that they couldn’t separately. “Our businesses are highly complementary and strategic. 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,” Reilly said in a statement. The companies commercialize the Hadoop open-source big data software, which companies can use to store, process and analyze lots of different types of data.

 Cloudera stock jumped as much as 25 percent  after it announced an all-stock merger of equals with competitor Hortonworks. Hortonworks stock was halted just prior to the announcement and jumped as much as 29 percent.. The combined equity value of the two companies is $5.2 billion  of their stocks . The deal is subject to U.S. antitrust clearance, and the companies expect it to close in the first quarter of 2019. Under the terms of the transaction agreement, Cloudera stockholders will own approximately 60% of the equity of the combined company and Hortonworks stockholders will own approximately 40% . Hortonworks shareholders will get 1.305 Cloudera shares for each share owned.
The two companies are committed to supporting existing offerings from the two companies for at least three years but will work on a "unity release" of software, drawing on technologies from both companies' portfolios, Reilly said. The unified company wants to honor Hortonworks' commitment around providing all of its software under open-source licenses, but over time there will also be a proprietary option that offer additional features, including in the cloud.

Tom Reilly, will serve as CEO of the combined company. Hortonworks' Chief Operating Officer, Scott Davidson, will serve as Chief Operating Officer; Hortonworks' Chief Product Officer, Arun C. Murthy, will serve as Chief Product Officer; and Cloudera's Chief Financial Officer, Jim Frankola, will serve as Chief Financial Officer, of the combined company.
Rob Bearden will join the board of directors. Current Cloudera board member, Marty Cole, will become Chairman of the board of directors. They plan to merge, creating a single company under the Cloudera banner that will focus on “edge to AI” opportunities.



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