Private equity money keeps pouring into tech, as Cloudera becomes latest multibillion-dollar buyout


An individual takes {a photograph} with an Apple iPhone of Cloudera signage throughout the firm’s preliminary public providing (IPO) on the of the New York Inventory Trade (NYSE) in New York, April 28, 2017.

Michael Nagle | Bloomberg | Getty Photos

Cloudera’s settlement on Tuesday to promote to a gaggle of buyout companies in a transaction valued at $5.three billion continues a 2021 pattern: many of the big-dollar offers in tech are going to personal fairness.

Of the 12 largest tech acquisitions this yr within the U.S., excluding particular goal acquisition corporations, seven of them have been orchestrated by non-public fairness companies, in accordance with knowledge from FactSet.

The largest was Thoma Bravo’s buy of safety software program vendor Proofpoint in April in a deal valued at $12.three billion. In February, Stone Level Capital and Perception Companions agreed to purchase tech-powered actual property firm CoreLogic for near $6 billion.

Clayton, Dubilier & Rice and KKR mentioned they’re teaming as much as purchase Cloudera partly to assist the info analytics firm extra quickly transition to the cloud. Alongside the takeover announcement, Cloudera mentioned it is buying two small corporations — Cazena and Datacoral — to broaden its public cloud choices.

Buyout companies have been more and more energetic in tech in recent times, primarily snapping up corporations which have skilled slowing progress and inventory market underperformance. Deal-making has picked up for the reason that early days of the coronavirus pandemic as extra organizations have come to depend on digital instruments to function their enterprise and keep related with workers.

Ernst & Younger mentioned in a report early this yr that know-how accounted for 24% of personal fairness offers by complete worth in 2020, up from 19% in 2019.

“General, the take non-public of Cloudera is simply one other instance of the large quantity of personal fairness cash searching for a house within the software program sector given the sturdy margin and retention profile of those corporations,” analysts at Stifel wrote in a report on Tuesday. “We count on M&A, each strategic and monetary, to stay energetic within the area within the coming quarters/years.”

Cloudera shares climbed 24% to shut at $15.93, slightly below the $16 acquisition value. Previous to Tuesday’s rally, the inventory was up 25% prior to now yr, trailing the Nasdaq Composite’s 45% achieve.

Cloudera has struggled as a public firm since holding its IPO in 2017. The corporate, together with Hortonworks, got here to the market as a frontrunner commercializing the open-source analytics know-how referred to as Hadoop. Cloudera and Hortonworks merged at the start of 2019 in what ended up as a $three billion deal, nicely under the place the businesses had been valued years earlier.

Competitors has ramped up within the cloud database and analytics market, each from infrastructure distributors like Amazon, Microsoft and Google and from rising corporations like Snowflake and Databricks.

Previous to the acquisition of Proofpoint, that firm’s inventory had gained 9% over the earlier 12 months, in comparison with the Nasdaq’s 62% leap. Proofpoint’s income progress slowed to 18% in 2020 from 24% in 2019 and 39% the yr earlier than that.

Among the many different prime non-public fairness offers in tech this yr had been Veritas Capital’s $7.1 billion buy of Perspecta, which offers providers to the federal government, and McAfee’s $four billion sale of its enterprise enterprise to a consortium led by Symphony Know-how Group.

Whereas non-public fairness offers account for greater than half of the most important tech acquisitions this yr, the 2 largest purchases have been strategic. Microsoft agreed in April to purchase speech recognition firm Nuance Communications for $16 billion. And in January, UnitedHealth Group’s Optum mentioned it was shopping for health-tech firm Change Healthcare for near $13 billion.

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