KKR & Cloudera's Memorial Day LBO

Issue 73

Cloudera was once one of the hottest Hadoop startups, but over time the shine has come off that market, and today it went private as KKR and Clayton, Dubilier & Rice, a pair of private equity firms, announced they intended to purchase Cloudera for $5.3 billion. The company has a market cap of around $3.7 billion.  This comes just three years after the 2018 merger of Cloudera and Hortonworks for $5.2 billion.

The deal will likely enable the financial resources for the company to facilitate a pivot into developing a more modern robust product for data processing without facing public activist investor pressure.

In terms of the buyout price, it may be a bargain for KKR as all data indicates that Intel marked down its $740 million 2014 investment as Cloudera bought Intel’s stake back for $314 million last year.  Time will tell if the private equity syndicate will be able to exit the deal with a healthy return or if they’ve waded into a dysfunctional minefield.  The deal provides Cloudera a shop provision to seek a better deal, which it likely won’t get – if the transaction proceeds it will likely conclude in the end of Q3 of this year.

Source: TechCrunch