Tech giant IBM has officially announced its intention to acquire HashiCorp, the creator of Terraform and a provider of cloud infrastructure tools, in a deal valued at $6.4 billion. The acquisition, expected to close by the end of 2024, marks a significant step for IBM in strengthening its hybrid cloud and AI capabilities.
IBM, headquartered in Armonk, N.Y., emphasized that the acquisition of HashiCorp aligns with its strategic focus on hybrid cloud and AI. The move is aimed at enhancing IBM’s ability to tap into the $1.1 trillion total cloud addressable market, positioning the company to address the evolving needs of enterprise customers.
Arvind Krishna, Chairman and CEO of IBM, highlighted HashiCorp’s track record in helping clients manage the complexity of modern infrastructure and application environments. He emphasized that combining IBM’s expertise with HashiCorp’s capabilities will result in a comprehensive hybrid cloud platform tailored for the AI era.
The acquisition, although subject to regulatory approval and shareholder consent, is expected to be accretive to IBM’s Adjusted EBITDA within the first year post-close and to free cash flow in the second year. Both companies’ boards have already approved the deal, with HashiCorp’s largest shareholders committing to vote in favor of the transaction.
HashiCorp’s automation capabilities for infrastructure and security lifecycle management have been cited as key strengths that attracted IBM. Terraform, in particular, is regarded as the industry standard for infrastructure provisioning in hybrid and multi-cloud environments, complementing IBM’s efforts in expanding partnerships with hyperscaler cloud providers and developer communities.
The acquisition of HashiCorp is expected to complement IBM subsidiary Red Hat, IBM AI platform Watson, and the company’s offerings in data security and IT automation. Users will benefit from the integration of Red Hat’s Ansible Automation Platform and Terraform’s automation, simplifying application provisioning across hybrid cloud environments.
HashiCorp co-founder and CTO, Armon Dadgar, expressed optimism about joining forces with IBM, noting that it will accelerate HashiCorp’s mission and broaden access to its products. HashiCorp CEO Dave McJannet echoed similar sentiments, stating that IBM is the ideal home for HashiCorp as it enters the next phase of its growth journey.
In a statement, HashiCorp assured customers and partners that it will continue to operate as a division within IBM Software, maintaining its focus on product development and service delivery. The acquisition is expected to enable HashiCorp to reach a larger audience and serve more users and customers than before.
With HashiCorp reporting positive financial indicators, including revenue growth and an expanding partner ecosystem, the acquisition by IBM is poised to further accelerate its growth trajectory. As the integration process unfolds, stakeholders will be closely watching for updates on how the combined strengths of IBM and HashiCorp will reshape the hybrid cloud and AI landscape in the coming years.
