• M&A
  • April 25, 2024
  • 3 minutes read

IBM To Buy Cloud Software Firm HashiCorp For $6.4B

International Business Machines (IBM), the New York-based IT giant, has struck a deal to acquire HashiCorp, a San Francisco-based cloud…

HashiCorp logo

International Business Machines (IBM), the New York-based IT giant, has struck a deal to acquire HashiCorp, a San Francisco-based cloud software company. IBM will pay $6.4bn in cash for HashiCorp, a 43% premium to the company’s market value before rumors of an imminent acquisition emerged.

  • IBM, founded in 1911, is one of the world’s oldest technology corporations. The NYSE-listed company sells a diverse portfolio of enterprise hardware and software products and reported a $7.5bn net profit on $62bn in sales in 2023.


  • HashiCorp (NASDAQ: HCP) was founded in 2012 and listed on the public markets in 2021. It sells software tools for managing cloud-based infrastructure.

Lately, IBM has focused on the burgeoning cloud software market to expand its business, so acquiring HashiCorp isn’t surprising. Post-acquisition, HashiCorp will join the long list of software products IBM sells to enterprises.

HashiCorp’s business has grown rapidly since its founding in 2012: it reported $583mn in revenue in the fiscal year ended March 2024. However, the San Francisco-based company has struggled to build a profitable business model, reporting a $191mn net loss in its last fiscal year. Selling to IBM is a safe path to appease investors, even though the acquisition price is less than half of HashiCorp’s $14bn market value when it debuted on the Nasdaq exchange in 2021.

  • HashiCorp is best known for its open-source Terraform cloud infrastructure management tool (it makes money by selling additional support services for its open-source tools to enterprises). Last year, HashiCorp abruptly switched Terraform from an open-source license to a proprietary license, drawing backlash from the developer community. The change made apparent business sense (in the short term) but dampened HashiCorp’s reputation with its hardcore developer fanbase.


  • In protest, a team of developers created an alternative open-source tool called OpenTofu, which might lessen Terraform’s dominant market share in the long term. HashiCorp has accused OpenTofu’s developers of using its proprietary code without permission, constituting copyright infringement. It’s unclear if HashiCorp will continue pursuing copyright claims while under IBM.

Barring regulatory hurdles, the IBM-HashiCorp deal is expected to close by the end of 2024.


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