May 16, 2024 | Technology | North America | Active

HashiCorp / IBM: Deal Insight

In a strategic move aimed at bolstering its cloud solutions offerings, IBM announced on 24-Apr-24 that it had entered into a definitive agreement to acquire HashiCorp, a leading provider of infrastructure management solutions. The tech giant is offering $35 cash per share, representing a 42.6% premium over HashiCorp’s undisturbed price on 22-Apr-24, before media reports hinted at the possibility of a deal. The transaction has been approved by both companies’ boards, and conditions to closing include HashiCorp shareholder approval (50% vote), while an IBM shareholder vote is not required. HashiCorp’s largest shareholders, who collectively own nearly 43% of the company, have entered into a voting agreement to support the deal and to reject any alternative transactions. Notably, a majority of minority vote is not needed. The deal is also subject to HSR approval and antitrust clearances from foreign jurisdictions, including the EU, as well as clearances under foreign investment laws. The merger agreement includes customary clauses on covenants, representations, warranties and a MAC, with carve-outs for war and pandemic. HashiCorp is also subject to a non-solicitation clause with customary fiduciary out exceptions. IBM intends to finance the acquisition using cash on hand. The preliminary merger proxy is expected to be filed “as promptly as reasonably practicable.” The companies expect the acquisition to close by the end of 2024. We currently assume 31-Dec-24 settlement, against a long-stop date of 24-Apr-25, extendible to 24-Oct-25. The termination fee is $264.2m, and there is no RTF. Deal Rationale IBM says the acquisition of San Francisco-based HashiCorp will allow it to cater to clients grappling with the exponential expansion of the cloud. HashiCorp’s products provide automated infrastructure lifecycle management (ILM) and security lifecycle management (SLM), which IBM believes are ...

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