IBM likes Hashicorp, finally puts a $6.4B ring on it

Monopoly watchdogs forever hold their peace, unlike developers still unhappy about Terraform license switch

IBM has finally completed the $6.4 billion takeover of Hashicorp days after Britain's competition regulator gave the corporate marriage its seal of approval.

The eye-wateringly expensive buy was first signposted in April to make IBM's hybrid cloud platform more "comprehensive," with Hashicorp's infrastructure-as-code (IaC) tool Terraform set to sync with Red Hat's Ansible under the Big Blue roof.

"Organizations globally are looking to deploy modern, hybrid cloud-ready apps, which require automated cloud infrastructure at significant scale," said IBM Software senior veep and chief commercial officer Rob Thomas.

The aim? "To infuse Hashicorp technology in every datacenter," he added.

Almost three-quarters of Hashicorp's revenue comes from the US and just a fifth of Forbes Global 2000 are users. With 75 percent of customers spending $100k in annual recurring revenue, IBM thinks its global sales tentacles can help boost the commercials further.

Analyst 6Sense puts Terraform, Hashicorp's IaC tool, at number one in terms of configuration management market share, holding onto just about a third of the category, with Ansible very closely behind at number two.

In addition to infrastructure, IBM will slide secrets manager Vault, portable software development platform creator Vagrant and machine image builder Packer alongside the Red Hat portfolio.

One thing IBM didn't mention when talking about the takeover was Hashicorp's seeming misstep in November 2023 when it forgot its historical roots by abandoning use of the Mozilla Public License in favor of the semi-proprietary Business Source License for previously open source programs.

The highest profile impact was to Terraform, as developers rebelled against the competition-limiting BSL and created a fork, OpenTF. This fork was subsequently renamed to OpenTofu out of fears about trademark infringement. It is now overseen by The Linux Foundation.

Vault is another open source fork that happened, with OpenBao launching in December 2023.

These decisions upset developers and customers and following the BSL move, Hashicorp's share price sunk to $21.11, sliding 22 percent from its October 2023 earnings.

Unperturbed, IBM stepped in and offered $35 per share, amounting to $6.4 billion. The decision resulted in IBM's share price sliding by high single digits as investors scratched their heads. IBM's market cap has since rallied: CEO Arvind Krishna convinced the market that its hybrid cloud and software aspirations have merit.

The FTC had opened an antitrust review in July and UK regulator the Competition and Markets Authority did the same in December. The CMA this week said it had "cleared the anticipated acquisition by IBM of HashiCorp" but didn't specify its reasons for doing so.

As such, IBM has finally managed to slip the ring on Hashicorp's finger in what Krishna views as a friendlier regulatory environment to pursue other biz targets, like DataStax. ®