Cloudera Inc., the enterprise data cloud platform company, announced on May 17th 2021, that KKR and CD&R have agreed to acquire it for $5.3 billion, a 35% premium to its last closing price. KKR and CD&R are private equity firms and the deal will see them join forces to purchase the software company and take it private.
Over the years, Cloudera has established itself as a well-known leader in the enterprise data cloud space, making it an attractive target for the private equity firms. This article will discuss the factors that make Cloudera an attractive target for KKR and CD&R.
KKR, CD&R Strike $5.3 Billion Deal to Buy Cloudera
KKR and CD&R announced a planned acquisition of Cloudera, a data platform provider, on November 4th, 2019 in a transaction valued at approximately $5.3 billion. The deal is expected to be completed in the second quarter of 2020.
This merger between Cloudera and KKR’s portfolio company will create an integrated platform with powerful analytics and automated management capabilities to help customers accelerate their digital transformation processes. In addition, the combined company will have an expansive technology portfolio, including Cloudera’s broad range of platform services, applications, partnerships and customer base.
Cloudera offers its customers enterprise data hubs that connect to existing systems through optimised pipelines designed for quickly ingesting and processing large amounts of data and provides customers with insights about their resources throughout their cloud journey. The acquisition of Cloudera provides KKR with the opportunity to strengthen its presence in the big-data market as it continues to grow rapidly alongside artificial intelligence technologies needed for digital transformation initiatives in enterprises across industries.
As part of this collaboration, KKR will bring its value creation platform including infrastructure resources in areas such as capital deployment and global reach. In addition, leveraging CD&R’s deep domain expertise along with KKR’s extensive technology experience across industries allows them to pursue greater potential opportunities within the growing big data market space than either could have achieved on their own.
Benefits for KKR and CD&R
KKR and CD&R have struck a $5.3 billion deal to buy Cloudera, an enterprise software company that provides data-management solutions. There are several benefits that KKR and CD&R see in this acquisition, as Cloudera’s open-source platform, Cloudera Data Platform, provides a unique opportunity for KKR and CD&R to gain a competitive edge.
Let’s look at some of this acquisition’s advantages to KKR and CD&R.
Cloudera’s Growing Business
Cloudera is a cloud data management and analytics leader, offering an enterprise data hub that helps customers manage, process, analyse and govern their data. It is the only enterprise data platform on the market that serves as a single source for large-scale operations. As a result, it has rapidly become a popular choice for companies accessing public cloud applications. Cloudera’s products have proven extremely successful in the marketplace, leading to increased adoption with close to 1600 global customers—including 100 of the Fortune 500.
The company continues to innovate and develop new products such as its integrated machine learning platform and managed streaming services. This allows KKR to benefit from Cloudera’s continued growth into new markets by offering superior infrastructure support and value-added services such as cloud consulting or machine learning capabilities at scale. This will be especially beneficial in further enhancing Cloudera’s current offerings which focus on efficiency linked with storage capabilities and scalability derived from consuming private, public cloud workloads or both while delivering consolidated performance metrics of cost optimization.
Moreover, KKR intends to employ CD&R’s expertise towards potential strategic acquisitions within Cloudera’s existing customer base which could translate into additional revenue streams. CD&R is known for its expansive network of technology companies running on its InfiniData Platform which makes it well positioned to capitalise on future opportunities within the data industry space as well as add value for current customers deployed within mixed infrastructures incorporating Kubernetes containerization technology or running big data workloads across multiple clouds such as AWS/Azure/GCP.
Cloudera’s Strategic Positioning
The acquisition of Cloudera by KKR and CD&R is a major win for these two private equity firms. Cloudera is an established leader in big-data analytics, with the technology necessary to give KKR and CD&R a significant edge in an increasingly competitive market.
Cloudera’s position as one of the major players in the big-data analytics market gives it potential opportunities to increase revenue with strategic partnerships and expand its cloud capabilities. In addition, the company’s powerful software helps enterprises manage their data more effectively, providing insights and helping them streamline operations. This gives the firm unique advantages that are attractive to potential partners and investors.
In addition to its strong position in the analytics industry, Cloudera has been at the forefront of developing artificial intelligence (AI) and machine learning (ML) technologies. These technologies have enabled organisations to gain insights from their data that are difficult or impossible using traditional methods. As AI and ML become increasingly prevalent, companies will need experienced providers like Cloudera to take advantage of these cutting edge tools.
By acquiring Cloudera, KKR and CD&R have positioned themselves for continued growth. The company is well-positioned for success in several areas such as business intelligence, predictive analytics, AI/ML technology development, cloud infrastructure services, and more. With this move, they have put themselves on track to realise tremendous benefits.
Cloudera’s Financial Strength
Cloudera has shown strong financial performance in recent years. In the 2017 fiscal year, total revenues exceeded $261 million – representing a growth of 50% from the previous year – and their market cap reached nearly $4 billion during their IPO in April following 5 years of rapid expansion and growth. Furthermore, according to their most recent SEC filing, Cloudera’s net cash increased to $695 million in FY2017, primarily due to stock sales.
Cloudera’s financial strength is further demonstrated by its ability to secure key partnerships and investments from enterprise leaders such as Intel and BMC Software. Having industry giants like these onboard helps Cloudera effectively reach customers on any scale while expanding its customer-base. Notable achievements include securing noteworthy deals with US Airways, BAE Systems and the US military. However, due to these successes, Cloudera ceded the position as leader for Hadoop-based Big Data solutions in 2017 according to Gartner report on Big Data frameworks.
Challenges for KKR and CD&R
KKR and CD&R announced a $5.3 billion deal to acquire cloud data platform Cloudera to strengthen their foothold in enterprise software and data-driven solutions.
But what sort of challenges will KKR and CD&R face in their acquisition of Cloudera? First, let’s explore the potential problems for the two firms.
Competition from Other Cloud Platforms
The agreement between KKR and CD&R to purchase Cloudera marks the latest in a series of strategic investments by the private equity giants to consolidate software company assets. Cloud computing is rapidly maturing and becoming more competitive, with a range of established players – such as Amazon Web Services, Google Cloud Platform, Microsoft Azure, and Oracle Cloud Infrastructure – already entrenching their positions.
This complicates Cloudera’s aspirations to increase its reach and visibility in cloud environments. With its relatively small market share compared to its peers, the company faces significant obstacles from entrenched incumbents across both public cloud infrastructure-as-a-service (IaaS) providers as well as software platforms for data engineering, artificial intelligence (AI), machine learning (ML), and analytics projects.
Cloudera will have to compete fiercely for potential customers with companies like Amazon Web Services offering robust services for machine learning and analytics projects on servers with GPUs (graphics processing units). In addition, Microsoft’s Azure platform also offers advanced analytics capabilities that allow users to build large-scale models using popular libraries like TensorFlow and PyTorch on GPU instances. On top of that, other big players like Oracle offer customers a range of cloud systems management tools to help them deploy their applications smoothly while keeping costs low across all services these three giants offer. As such, the battle lines are drawn: Cloudera will have to fight an uphill battle to gain market share.
Regulatory uncertainty is a key challenge facing KKR and CD&R regarding their $5.3 billion purchase of Cloudera. In the US, technology companies are subject to antitrust rules, which aim to protect competition in the market by preventing one company from gaining an unfair advantage over its rivals. As such, the Federal Trade Commission, Department of Justice and other regulators must approve any significant acquisition by KKR and CD&R before it can move forward.
Furthermore, antitrust laws vary significantly between countries and problems could arise if the merged company has too much market power in certain regions or countries. Similarly, foreign investments may be subject to review by their respective governments and local regulations. Therefore, understanding these implications and taking appropriate measures will be essential if KKR and CD&R are to complete the purchase of Cloudera without any major issues.
In conclusion, the $5.3 billion deal to acquire Cloudera Inc. by KKR and CD&R is very attractive. As Cloudera becomes a more attractive target and a valuable asset, KKR and CD&R can leverage the expertise, experience, and technology they bring to further bolster Cloudera’s operations and success.
Furthermore, the synergy that KKR and CD&R bring will surely add more value to Cloudera’s products and services.
Impact of the Deal on the Market
The Cloudera KKR CD&R deal is positive news for the market and investors. The acquisition will create an enterprise software powerhouse that could compete against giants such as IBM, Oracle and Microsoft. It will also create a strong open source platform incorporating cloud computing, analytics and machine learning capabilities.
Combining these technologies will bring innovation, creating opportunities in traditional data warehousing, machine learning and artificial intelligence applications. Cloudera’s machine learning capabilities are also attractive to potential partners or customers looking to increase efficiency through predictive models or automation. Furthermore, integrating core open source technologies into commercial offerings matches the trend driving enterprise transactions today – consolidation of technology stacks into single vendor solutions.
The combined solution between KKR CD&R and Cloudera presents increased customer value by increasing the speed at which business insights are derived from data. By leveraging already existing technology from both sides and providing additional proprietary features that customers have requested, KKR CD&R will be taking an important leadership position in building an enterprise platform for Solving Last Mile Problems for clients no matter what size – large enterprises or SMBs. This end-user focused approach towards providing intelligent software comes with confidence inspired by using industry-leading cloud infrastructure platforms such as AWS, GCP or Azure.