IBM elevates cloud play with US$6.4-billion buy of HashiCorp

IBM and HashiCorp have entered into a definitive agreement under which the tech giant will acquire the multi-cloud infrastructure automation company for US$35 per share in cash, representing an enterprise value of US$6.4 billion. 

HashiCorp’s suite of products provides enterprises with extensive infrastructure lifecycle management and security lifecycle management capabilities to enable organisations to automate their hybrid and multi-cloud environments. 

IBM chairman and CEO Arvind Krishna said enterprise clients are wrestling with an unprecedented expansion in infrastructure and applications across public and private clouds, as well as on-premise environments. 

“The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies,” the CEO said. 

“HashiCorp has a proven track record of enabling clients to manage the complexity of today’s infrastructure and application sprawl,” he added. “Combining IBM’s portfolio and expertise with HashiCorp’s capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era.”

The rise of cloud-native workloads and associated applications is driving a radical expansion in the number of cloud workloads enterprises are managing. 

In addition, generative AI deployment continues to grow alongside traditional workloads. As a result, developers are working with increasingly heterogeneous, dynamic, and complex infrastructure strategies. This represents a massive challenge for technology professionals.

HashiCorp’s capabilities enable enterprises to use automation to deliver lifecycle management for infrastructure and security, providing a system of record for the critical workflows needed for hybrid and multi-cloud environments. 

According to IBM, HashiCorp’s offerings help clients take a cloud-agnostic, and highly interoperable approach to multi-cloud management, and complement IBM’s commitment to industry collaboration (including deep and expanding partnerships with hyperscale cloud service providers), developer communities, and open-source hybrid cloud and AI innovation.

“Our strategy at its core is about enabling companies to innovate in the cloud, while providing a consistent approach to managing cloud at scale,” said Armon Dadgar, HashiCorp co-founder and CTO.

“The need for effective management and automation is critical with the rise of multi-cloud and hybrid cloud, which is being accelerated by today’s AI revolution,” said Dadgar.

IBM said the acquisition of HashiCorp creates a comprehensive end-to-end hybrid cloud platform built for AI-driven complexity. The combination of each company’s portfolio and talent will deliver clients extensive application, infrastructure and security lifecycle management capabilities.

Upon close, expected by the end of 2024, HashiCorp is seen driving significant synergies for IBM, including across multiple strategic growth areas like Red Hat, watsonx, data security, IT automation and Consulting. 

Also, the acquisition is expected to give clients a platform to automate the deployment and orchestration of workloads across evolving infrastructure, including hyperscale cloud service providers, private clouds and on-prem environments.

HashiCorp boasts a roster of more than 4,400 clients, including Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone. HashiCorp’s offerings have widescale adoption in the developer community and are used by 85% of the Fortune 500. 

Under the terms of the agreement, HashiCorp will be acquired with available cash on hand.

The boards of directors of IBM and HashiCorp have both approved the transaction. The acquisition is subject to approval by HashiCorp shareholders, regulatory approvals and other customary closing conditions.