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Enterprise software and services giant IBM is buying IT infrastructure provider HashiCorp for $6.4 billion, or $35 per HashiCorp share in cash, the two companies announced Wednesday.
Boards from both companies have approved the deal, which is expected to close by the end of 2024.
HashiCorp’s software for infrastructure and security life cycle management will complement IBM’s services around hybrid cloud and AI, IBM asserted in a news release.
HashiCorp will continue to operate as a division within IBM.
The purchase, like the IBM acquisition of Red Hat in 2018, will further cement IBM’s presence in the field of cloud native computing, many deployments of which already use HashiCorp’s Terraform multicloud infrastructure provisioning tool.
“By joining IBM, HashiCorp products can be made available to a much larger audience, enabling us to serve many more users and customers. For our customers and partners, this combination will enable us to go further than as a standalone company,” wrote Armon Dadgar, HashiCorp co-founder and chief technology officer, in a blog post.
For IBM, HashiCorp can support Big Blue’s strategic growth areas like Red Hat, the watsonx AI offerings, data security, IT automation and consulting.
It will also set the stage for a new set of integrated offerings that combine HashiCorp’s software with that of IBM and Red Hat, which will allow customers to rerun operations across multiple public cloud providers (“multi-cloud”).
HashiCorp has an impressive roster of 4,400 customers, including 85% of the Fortune 500, with clients such as Bloomberg, Comcast, Deutsche Bank, GitHub, J.P Morgan Chase, Starbucks and Vodafone.
The company’s portfolio of software products includes:
Terraform has been HashiCorp’s flagship product, though its use has been declining over the past several years — A recent JetBrains survey of developers found usage dipping from 37% to 33% from 2022 to 2023 — as a new generation of more flexible Infrastructure as Code tools have come into the market from Nitric, Pulumi and others.
Terraform may also be suffering from a splintering user base.
In August, HashiCorp moved the previously open source Terraform, along with the rest of its portfolio, to the non-open source Business Source License (BSL). Competing Terraform service providers (including Scalr, env0, and Spacelift) quickly forked the code to create the open source OpenTofu, which was swiftly backed by the Linux Foundation.
In December, Vault was also forked into an open source version called OpenBao — a project guided, ironically, by an IBM engineer.
Now that HashiCorp’s software will be under management from the historically open source-friendly IBM, some open source advocates are hoping Big Blue will undo HashiCorp’s abrupt BSL license change of last year.
“If I were the leader at IBM responsible for the HashiCorp deal, moving all HashiCorp products to Apache-2.0 would be the first decision I would make, and ensure that decision was highlighted in the initial press release,” Kelsey Hightower wrote on the X social media service.
TNS analyst Lawrence Hecht contributed to this post.
