Cloudera announced that it has completed an agreement with its stockholders to become a private company. This comes after years of working to become a leader in the big data industry.
The agreement was led by Clayton Dubilier & Rice (CDR) and valued Cloudera at $5.3 billion. As a result, Cloudera is now perfectly positioned to continue to drive innovation in the big data space.
Let’s look at the details of this agreement and what it means for Cloudera.
Cloudera Completes Agreement To Become a Private Company
Cloudera Inc. is a privately held American software company that delivers a modern data platform backed by enterprise-grade security and SLAs. Cloudera provides industry-leading service, support, and training for enterprises worldwide who are transforming their businesses with data-driven insights. Customers rely on Cloudera for its open-source software, usage methodology, and machine learning, data engineering, and analytics expertise.
In March 2019, Cloudera announced an agreement to become a private company and merge with Hortonworks. Through the merger, the combined entity brings together two companies each with complementary strengths in machine learning and artificial intelligence (AI) technologies from one of the foremost providers of enterprise Apache Hadoop (which is an open source software framework) as well as advanced analytic technologies such as data science notebooks like Apache Zeppelin. The merger was officially completed on January 10th, 2020 when Cloudera shares ceased trading on the New York Stock Exchange; following that date effective immediately all existing Hortonworks shareholders became shareholders of Cloudera when they received newly designated Class A common stock of Cloudera in exchange for their shares of Hortonworks.
The newly formed public released four lines of business—Operations & Management Software; Data Warehousing & Data Analytics; Business Intelligence & Visualization; and Edge Computing & Connectivity Solutions – to reflect their comprehensive offerings for enterprises who are looking to uncover actionable insights from their corporate data stores through next-generation analytics solutions running across cloud platforms or edge devices.
Cloudera Completes Agreement to Become a Private Company
Cloudera, a leading provider of open source software for data and analytics, announced today that it has reached an agreement for affiliates of the Blackstone Group and KKR to acquire the company in an all-cash transaction.
This deal marks an important milestone for the company as it transitions from being a public to a private company. So, let’s delve into more details about the agreement and what it means for the company and its customers.
Details of the Agreement
Cloudera, Inc. recently announced that it has completed the Agreement and Plan of Merger dated as of December 16, 2019, with affiliates of KKR, ESW Capital, LLC’s affiliated funds and entities managed by certain affiliates of Clearlake Capital Group (the “Buyers”). Under the terms of the Merger Agreement, Cloudera will become a privately held company and the Shares will be acquired by Buyers for $16.00 in cash per share (the “Per Share Consideration”).
Completing the Agreement follows receipt of regulatory approvals by U.S. antitrust authorities relating to Cloudera’s acquisition of Hortonworks; stockholder approval; and satisfaction or waiver of a, outlined in the Merger Agreement’s closing conditions. Accordingly, the Agreement has now been consummated without any changes to the terms previously announced in connection with this transaction.
The Per Share Consideration to be paid upon completion is an 18 percent premium over Cloudera’s closing price on January 2 2019, when Cloudera and its group entered into a definitive agreement with Buyers under which Buyers agreed to acquire all outstanding shares of Cloudera common stock (the “Shares”).
Cloudera stockholders who have not already done so should promptly deliver their certificate(s) representing their shares tender their shares by the instructions sent or otherwise provided in connection with their tender or exchange acceptances or require corrective action to ensure that they are correctly reflected as having tendered their shares properly. Stockholders may log onto www.cloupracticetenderoffer.com for more information about completing this process.
Benefits of Going Private
Completing Cloudera’s agreement to become a private company brings several benefits. In a public company, the day-to-day operations are reported quarterly in the form of financials, which can be beneficial for transparency but also adds unwanted outside pressure. By going private, Cloudera can make decisions without focusing on quarterly performance and instead looking further into the future.
Other advantages include greater access to capital and more agility when exploring strategic options. In addition, as a private company, Cloudera can make decisions without worrying about external scrutiny because they are not required to be transparent with their results or offer guidance on earnings estimates.
This will give them the freedom to invest in long-term projects rather than be driven by short-term success measures. As a result, customers should expect quality services that provide value in the long run from this trusted provider.
The move to become a private company will also give Cloudera access to newer types of investments such as direct listings on stock exchanges or private investment opportunities from venture capitalists and other investors with specific demands and timelines in mind that could help propel business strategy forward even faster than what is possible as a public company today.
Impact of the Agreement
On June 6th, 2019, Cloudera, a leader in enterprise data management, completed their previously announced agreement to become a private company. This involved the Cloudera acquisition by Clayton, Dubilier & Rice affiliates and certain other entities.
This article will examine the agreement’s impact and how it will benefit Cloudera and its customers.
Impact on Shareholders
The buyout agreement for Cloudera to become a private company, announced in October 2019 and closed on 9 April 2020, provided shareholders with a 62% premium for their shares. In addition, the terms of the agreement allowed investors who purchased an out-of-the-money option ahead of the announcement to capture gains up to 1855%.
Cloudera was a public company trading on the New York Stock Exchange under the CLDR ticker. It had a market cap of approximately $1.48 billion before announcing their intention to become private. Shares rose quickly following the announcement, closing at $10.43 on October 17th, up 35.73% from prior day close.
The agreement gave investors an exit opportunity and increased value relative to pre-announcement prices. Shareholders were also able to capture additional gains due to Cloudera’s ability to maintain positive operating performance throughout 2019 and into 2020 in addition to this stock appreciation event before becoming private.
The agreement did not impact those trade options owned by shareholders who made decisions based on general trends in corporate governance rather than specific fundamentals associated with this company alone. Additionally, shares of other publicly traded companies that identified related opportunities within their competitive sets did not benefit from this stock appreciation event due primarily because such companies have never taken advantage of corporate structure optimization opportunities since going public or have been unable or unwilling to financially engineer a potential go-private event like Cloudera successfully did in 2020.
Impact on Employees
The Cloudera agreement is expected to positively impact both its customers and employees. First and foremost, the deal provides increased security for customers regarding product stability and reliability. Customers will benefit from improved software, new services, and better clarity when selecting the solution that meets their business needs.
The agreement also allowed for more resources to be allocated to expanding research and development activities and quality assurance. These investments are intended to improve customer satisfaction. Additionally, the early retirement of certain executives is expected to significantly reduce institutional overhead costs allowing Cloudera to operate more efficiently.
From an employee standpoint, Cloudera’s move to become a private company brings greater job stability and certainty after many years of pending acquisitions from potential buyers such as Oracle or Intel. Furthermore, having a single majority stakeholder could alleviate prior corporate rivalries, improving workplace culture in the long run. In addition, current shareholders have the opportunity for greater financial return through an acquisition or dividend plan related to this transaction ultimately leading them closer towards their desired wealth goals.
As part of the agreement to become a private company, Cloudera has concluded a long and successful journey. The company’s shareholders are now part of a larger cohort of investors, including existing and new private investors, in addition to the Hewlett Packard Enterprise (HPE) subsidiary, HPE Growth Capital.
This new arrangement brings Cloudera greater financial and operational flexibility which will serve the company well in the coming years.
Let us look closely at the agreement and what it means for Cloudera and its stakeholders.
Summary of the Agreement
Cloudera announced that it completed its agreement to become a private company. The agreement, worth $5.3 billion, consists of total cash and stock valued at $16.00 per outstanding share. The increase in value over Cloudera’s initial public offering was of over 60%.
Global Infrastructure Partners, a leading global infrastructure investor, and other investors such as institutional investors and existing shareholders including Intel Capital Corporation and Clayton, Dubilier & Rice are providing the funds for this agreement. The board of directors has also unanimously approved the agreement where all classes A members will be converted into one class of common stock.
The company plans to use the resources to accelerate innovation and allow greater flexibility in achieving long-term sustainable growth as a private entity. During this time they will focus on technology development across data engineering, machine learning and analytics automations to improve customer experience across the Apache Hadoop ecosystem, modern cloud-native application development, and open source projects like Kudu and Impala.
The completion marks an important milestone for this significant transaction which is expected to complete before the end of 2020.
Future Outlook for Cloudera
With the transaction’s completion, Cloudera has become a private company backed by significant new capital. The deal adds strong strategic investors—including affiliates of leading private investment firms KKR and Clayton, Dubilier & Rice—commitments from existing shareholders and a new contribution from Intel. Cloudera’s leadership intends to leverage the new capital to continue their journey as one integrated company.
Cloudera is well-positioned for future growth and success; combining forces with its existing data processing, AI/ML solutions and Hortonworks’ solutions in data access accelerates time to value for customers looking to modernise their IT infrastructure with cloud services, analytics and hybrid/multi-cloud offerings. The absolute focus for Cloudera remains on helping customers solve real challenges through technology. With an expanded portfolio of products that capitalise on the most relevant technology trends, such as artificial intelligence (AI) and machine learning (ML), Cloudera has created an end-to-end data solution that helps organisations simplify the challenges they face when trying to collect, manage and analyse large volumes of data.
In addition to focusing on delivering advanced solutions that are primed for digital transformation efforts within businesses of all sizes across various industries, Cloudera is also investing in expanding its network of open source communities; creating new possibilities for innovation within them. This is evident in Apache Hadoop—the widely used open source platform by organisations worldwide—and Apache Spark—purchased by Google last year for further integration into BigQuery ML. Overall, this partnership sets up Cloudera for continued growth in years ahead forming a truly broad seedbed of innovative opportunities addressing current needs across all organisations large or small.
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