Cloudera To Go Private in $5.3 Billion Buyout by Wall Street Firms

The long tale of Hadoop got another twist today when Cloudera announced that it has agreed to be acquired by a pair of investment firms for $5.3 billion. The acquiring companies, Clayton, Dubilier & Rice (CD&R) and KKR, made an all-cash offer that is equivalent to $16 per share for Cloudera, a 24% premium as of Friday’s closing. The deal is expected to close in the second half of the year, resulting in Cloudera becoming a private company once again.

Ever since the calamitous summer of 2019, when Cloudera revenue suddenly dropped and its then-CEO was ousted, it has been suspected that the Cloudera board was seeking an exit. Rumors surfaced nearly a year ago when Bloomberg reported that the company was working with a financial advisor and was talking with potential buyers, including private equity firms. The Santa Clara, California software company would not confirm those talks to Datanami at the time.

Following completion of the acquisition, Cloudera will continue to operate as a private company. In fact, the company also announced two acquisitions today, of Datacoral and Cazena. It also announced financial results for the first quarter of fiscal 2022, in what can only be described as the announcement trifecta.

Cloudera CEO Rob Bearden said the deal will provide value to shareholders while accelerating the company’s “long-term path to hybrid cloud leadership for analytics.” “We believe that as a private company with the expertise and support of experienced investors such as CD&R and KKR, Cloudera will have the resources and flexibility to drive product-led growth and expand our addressable market opportunity,” Bearden said in a press release.

Rob Bearden was named CEO of Cloudera on January 13, 2020

Clayton, Dubilier & Rice is a New York-based private equity firm that was originally launched as a turnaround specialist back in 1976. Over the years, the company has worked deals with companies like Borg-Warner’s Industrial Products Division and the Uniroyal Goodrich Tire Company. In 1990, it formed Lexmark from IBM’s printer and keyboard business. Over the years, the company has managed the investment of more than $35 billion in 100 companies, with an aggregate transaction value of more than $150 billion, the company says.

KKR, formerly known as Kohlberg Kravis Roberts & Co., is also a New York-based private equity company founded in 1976. In addition to private equity deals (the company has completed more than 280 of them worth more than $545 billion over the years), it also has invested in energy, infrastructure, real estate, credit, and hedge funds. Among its notable deals over the years are a friendly $5.5 billion buyout of Safeway in 1986 and the $31.1 billion buyout of RJR Nabisco in 1988, which would be the biggest buyout in American financial history for nearly two decades.

The deal for Cloudera is quite a bit smaller, although attentive readers will not that it was $100 million more than what Cloudera paid for rival Hortonworks in late 2018. A key element to finalizing the deal was securing a yes vote from Carl Icahn’s group, which owns 18% of the outstanding shares.

The deal is subject to customary closing conditions. The deal also includes a clause for a 30-day “go-shop” deal, in which Cloudera can actively look for a better deal than the $5.3-billion one offered by KKR and CD&R.  Morgan Stanley & Co LLC is serving as exclusive financial advisor to Cloudera, while Latham & Watkins, LLP is serving as legal advisor to Cloudera.

With interest in on-prem Hadoop and its assocaited farm animals waning, Cloudera has concentrated its development efforts for the past two years on developing a data management platform suitable for multi-cloud and hybrid cloud strategies. The Cloudera Data Platform (CDP) resonates with Jeff Hawn, an operating partner with CD&R and the future chairman of the board at Cloudera.

“The company has made significant progress establishing the…CDP as a leader in hybrid and multi-cloud analytics, and we believe that our experience and capabilities can offer valuable support to accelerate expansion into new products and markets,” Hawn said in a press release.

John Park, a partner with KKR and its head of Americas Technology Private Equity, said KKR is looking forward to helping Cloudera to move forward as a private company. “We have followed the Cloudera story closely for a number of years and are pleased to be supporting its mission of helping companies make better use of their data in the ever-evolving hybrid IT environment,” he said in a press release.

The acquisition of Cloudera apparently didn’t dampen the company’s capability to make its own deals, as it announced two acquisitions today. Both of them are expected to close by July 31.

The acquisition of Datacoral gives Cloudera a cloud-based, low-code alternative to manually constructed and managed ETL data pipelines. Datacoral boasts more than 80 pre-built connectors to a range of data sources, including change data capture (CDC) connectors for Postgres and MySQL databases.

Cazena, meanwhile, nets Cloudera a cloud-based platform that’s designed to automate and abstract away many of the tedious manual tasks associated with building and maintaining a data lake. Cazena was already a Cloudera partner and included CDP as one of its cloud data lake targets for customers running on major public clouds.

Meanwhile, the company also announced financial results for the first quarter of fiscal year 2022 ended March 31. The company recorded total revenue of $224.3 million and subscription revenues of $200.7 million, both of which represented 7% increase from the previous quarter. Its GAAP net loss per share for the first quarter of fiscal 2022 was $0.14, compared to $0.20 for the first quarter of fiscal 2021.

At the end of March, the company’s annualized recurring revenue was $805 million, representing a 12% increase from a year ago. The company canceled its analyst call scheduled for tomorrow, and announced that it will no loner provide any guidance as to its expected results for the rest of the year.

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