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Cloudera and Hortonworks Announce Merger

Companies say combined entity will offer a unified platform, accelerate market development, and fuel innovation.

Cloudera, Inc. and Hortonworks, Inc. have entered into an all-stock merger agreement under which the companies will combine as a merger of equals, the companies announced. The transaction has been unanimously approved by the boards of directors of both companies and is expected to be completed by the first quarter of 2019. The merger is subject to Cloudera and Hortonworks' stockholder approval as well as U.S. antitrust clearance.

Tom Reilly, chief executive officer at Cloudera, stated, "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."

The merger will benefit "from the enhanced offerings, larger scale, and improved cost competitiveness inherent in this combination," according to Rob Bearden, chief executive officer of Hortonworks. "Together, we are well positioned to continue growing and competing in the streaming and IoT, data management, data warehousing, machine learning/AI and hybrid cloud markets."

Philip Russom, senior research director for data management at TDWI, noted: "Cloudera has held the largest market share (by far) in the Hadoop distribution and enhancement market. The merger is clearly a move to make Cloudera's market share even bigger. Hortonworks' customers will eventually be better off with Cloudera, which has more resources and a clearer vision for the post Hadoop hype market.

"Their stated goals are consistent with what all Hadoop-driven vendors want: to hold onto their Silicon Valley and Internet-only market while addressing the mainstream enterprise-driven data management market. They plan to take it all to the cloud. Those plans are useful from an end users' perspective, since enterprises of any size or maturity (regardless of industry) need bigger and better big data and analytics platforms, as complements to ongoing investments in traditional relational platforms -- and users are progressively demanding cloud-based data management."

Under the terms of the agreement, Cloudera stockholders will own about 60 percent of the equity of the combined company and Hortonworks stockholders will own about 40 percent after Hortonworks stockholders receive shares of Cloudera.

The company says the combined agreement will "accelerate market development and fuel innovation in IoT, streaming, data warehouse, hybrid cloud, and machine learning/AI." Financial benefits include "more than $125 million in annual cost synergies."

Once the merger is complete, Cloudera's chief executive officer, Tom Reilly, will serve as CEO; Hortonworks' chief operating officer, Scott Davidson, will become COO.

The board of directors of the newly-formed company -- the companies did not reveal the expected name -- will initially comprise nine directors -- four from Hortonworks' existing board and five from Cloudera's. The board will then select a tenth member.

About the Author

James E. Powell is the editorial director of TDWI, including research reports, the Business Intelligence Journal, and Upside newsletter. You can contact him via email here.

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