IBM expands hybrid cloud portfolio with $6.4B acquisition of HashiCorp

As expected, IBM Corp. today announced that it has entered into a definitive agreement to acquire infrastructure management provider HashiCorp Inc. for $35 per share in cash, for a total of $6.4 billion.

Reports that IBM was in talks to acquire Hashicorp emerged yesterday, with a claim that a deal could be signed in a matter of days. As it turned out, the deal was signed one day later.

Founded in 2012, Hashicorp offers a suite of open-source tools that are used by enterprises to manage their cloud infrastructure. The company’s main offering, called Terraform, automates setting up cloud instances and other hardware resources, as well as monitoring and detecting any erroneous changes to configuration settings.

HashiCorp’s offerings help clients take a cloud-agnostic and interoperable approach to multicloud management. The company makes its money by providing cloud-hosted versions of its open-source tools through the Hashicorp Cloud Platform.

The company currently has over 4,400 clients, notable among them Bloomberg LP, Comcast Corp., Deutsche Bank AG, GitHub Inc., J.P Morgan Chase & Co., Starbucks Corp. and Vodafone Group Plc. HashiCorp’s tools are said to have widescale adoption in the developer community and are used by 85% of the Fortune 500.

IBM said the decision to buy HashiCorp is a continuation of its “deep focus and investment in hybrid cloud and AI, the two most transformational technologies for clients today.” IBM also went further by explaining that its acquisition of HashiCorp represents a strong strategic fit, creating a comprehensive end-to-end hybrid cloud platform tailored for AI-driven complexity. The move is expected to accelerate IBM’s growth in key areas such as Red Hat, Watsonx, data security, IT automation and consulting.

“Today’s announcement by IBM of its intent to acquire HashiCorp seems to represent a strategic step forward in the company’s agnostic hybrid cloud strategy,” Jordan Berger, analyst at global research firm Third Bridge Group Ltd., said in emailed comments.

Post-acquisition, IBM also plans to integrate Red Hat’s Ansible Automation Platform with HashiCorp’s Terraform to simplify application provisioning and configuration across hybrid cloud environments.

“IBM’s leadership in hybrid cloud along with its rich history of innovation, make it the ideal home for HashiCorp as we enter the next phase of our growth journey,” HashiCorp Chief Executive Dave McJannet said in a statement.

The acquisition is subject to shareholder approval, regulatory approvals and other customary closing conditions and is expected to be completed by the end of 2024.

Image: HashiCorp