IBM in Advanced Talks to Acquire Cloud Software Provider HashiCorp

IBM is reportedly in advanced negotiations to acquire HashiCorp, a prominent cloud software provider, according to a Wall Street Journal report on April 23, 2024. The potential deal, which could be finalized in the coming days, has driven HashiCorp's stock up by 24%, valuing the company at $6.1 billion.

HashiCorp, founded in 2012, specializes in offering solutions that help companies manage their cloud infrastructure. The San Francisco-based company went public on Nasdaq in 2021 and reported a net loss of nearly $191 million on $583 million in revenue for the fiscal year ending January 31. Despite the loss, HashiCorp's revenue jumped almost 23% during that period, outpacing IBM's 2% growth in 2023.

Why this matters: The potential acquisition aligns with IBM's strategy under CEO Arvind Krishna to focus on acquisitions to build out its cloud offerings, particularly amid the growing demand for generative artificial intelligence. If successful, the deal could mark another significant investment by IBM in expanding its cloud portfolio, following its $34 billion acquisition of Red Hat in 2018.

IBM has been actively pursuing acquisitions to bolster its cloud offerings, with the company completing nine acquisitions in 2023, including a $4.6 billion deal for technology spend management platform Apptio. However, the Wall Street Journal noted that it is still possible that the talks may not lead to a final transaction.

Cisco had previously engaged in early acquisition talks with HashiCorp in 2019 and held $9 million in HashiCorp shares as of the end of March. The news of the potential acquisition initially caused a drop in IBM's stock after the Wall Street Journal article was published, but it quickly recovered.

According to unnamed sources familiar with the matter, IBM and HashiCorp could reach an agreement as soon as Wednesday, April 24. However, representatives from both companies have declined to comment on the speculation. "A deal for HashiCorp could come together in the coming days, though it is still possible the talks may not result in a transaction," the Wall Street Journal reported.

Key Takeaways

• IBM in advanced talks to acquire cloud software provider HashiCorp.
• Potential $6.1B deal could expand IBM's cloud offerings, amid AI growth.
• HashiCorp went public in 2021, reported $583M revenue in 2023.
• Cisco previously engaged in early acquisition talks with HashiCorp.
• Deal may be finalized soon, but talks may not result in transaction.