Cloudera Is Going Private In a $5.3 Billion Deal

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Enterprise data specialist Cloudera (NYSE: CLDR) has lagged the broader market since its IPO in 2017. Activist investor Carl Icahn took a stake in the company a couple of years ago and began pushing for a company sale to maximize shareholder value. Rumors of a potential takeover have circulated over the past year.

Well, the infamous corporate raider just got what he was looking for, as Cloudera announced this week that it will go private in a $5.3 billion deal. 

Just $1 more than the IPO price

Private equity giants Clayton, Dubilier & Rice (CD&R) and KKR have agreed to acquire Cloudera for $16 per share in cash, which represents a 24% premium to Friday’s closing price. That price tag values the company at $5.3 billion. 

Additionally, the offer of $16 per share is just $1 higher than Cloudera’s IPO price of $15. Investors who bought in directly to the public debut three years ago and still hold those shares will only enjoy modest gains. Chip juggernaut Intel (NASDAQ: INTC) had previously invested in Cloudera prior to its IPO at $30.92 per share, but Cloudera bought back that stake in late 2020 for just $12.05 per share.

“This transaction provides substantial and certain value to our shareholders while also accelerating Cloudera’s long-term path to hybrid cloud leadership for analytics that span the complete data lifecycle—from the Edge to AI,” Cloudera CEO Robert Bearden said in a statement. “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.”  

Cloudera has a 30-day go-shop period where it can solicit competing bids from alternative suitors. 

2 other announcements

In separate news, Cloudera also reported fiscal first-quarter earnings. Total revenue increased 7% to $224.3 million, and annual recurring revenue (ARR) now stands at $805 million. Adjusted subscription gross margin expanded to 91%, and Cloudera finished the quarter with $903 million in cash. That all resulted in adjusted earnings per share of $0.12. 

On top of that, the company said it had agreed to acquire two other software-as-a-service (SaaS) companies, Datacoral and Cazena. Datacoral operates a cloud-based data pipeline platform that integrates with other data lakes and data warehouses, while Cazena is an automated data lake that can bolster the performance of artificial intelligence and machine learning (AI/ML) workloads. Cloudera did not disclose financial terms for either transaction, but both deals are expected to close this quarter.

The other news announcements are no longer relevant to public investors due to the pending acquisition, so Cloudera canceled its earnings conference call accordingly. The deal with CD&R and KKR is expected to close in the second half of 2021.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.