Cloudera Will Go Private in a Private Equity Deal Valued at $5.3 Billion

The News: Private-equity firms KKR & Co. and Clayton Dubilier & Rice LLC agreed to buy Cloudera Inc. for roughly $5.3 billion in a deal that would take the software company private.

The pair on Tuesday said they would pay $16 a share for the data-cloud company, representing a roughly 24% premium to where the shares closed Friday. Read the full news piece on the Wall Street Journal.

Analyst Take: Cloudera delivered a volume of news yesterday, including releasing its earnings, two acquisitions, and of course, the big headline of the deal with KKR and CD&R to take the company private.

Since the merger of Cloudera and Hortonworks, the company has been on a steady growth trajectory. Still, it has been facing a challenge in positioning and innovating to meet modern architectures taking Cloudera’s services to the cloud and scaling to embrace more fluid datasets and simplifying the adoption of its products.

I believe despite today’s news, Cloudera’s vision was on a good path, and its modernization ambitions would have come good. However, I’ve long felt that the pressures of quarterly reporting to Wall Street can create a short-sightedness that deters longer-term strategic planning and product development. Cloudera needs to make these changes to enter its next phase of growth, and being held privately by firms with a strong track record of strategic investment will act as an enabler for the company.

Two Acquisitions to Go Along With the Deal

Amidst the announcement of going private, Cloudera concurrently announced an agreement to acquire two SaaS companies, Datacoral and Cazena. I believe that these acquisitions are not only strategic but will accelerate Cloudera’s roadmap for self-service data and analytics in the public cloud and expand its market opportunity.

Datacoral provides a fully managed service enabling fast and easy data transformations and integrations for any type of data using no-code connectors. The no-code capabilities are particularly important.

Cazena’s technology powers the delivery of instant cloud data lakes, materially accelerating time to analytics and AI/ML.

Overall Impressions of Cloudera’s Announcements

Cloudera pushed its earnings out among its announcements, and while posting another solid quarter, the 7% YoY growth and 12% increase in recurring revenue leave some runway for growth for a company well-positioned to monetize the growing demand for analytics in a data-rich world.

The move to go private will be an accelerator. I believe that KKR and CD&R are strategic partners that are taking the company private with a clear ambition to grow faster and with less pressure from the street.

Cloudera is well-positioned to embrace shifting architectures and monetize the migration and evolution of big data architectures with sound execution. This was further evident from the Datacoral and Cazena acquisitions, which come at an opportune moment amidst the deal to take Cloudera private.

Futurum Research provides industry research and analysis. These columns are for educational purposes only and should not be considered in any way investment advice.

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Image: Cloudera

The original version of this article was first published on Futurum Research.