Private equity firms KKR and CD&R are taking big-data pioneer Cloudera Inc. private in a deal valued at $5.3 billion including assumed debt, the company announced today.

The acquisition “will allow us to concentrate our efforts on strategic business opportunities and take thoughtful risks that help accelerate growth,” Cloudera president Mick Hollison wrote this morning. Alongside the news that it’s being acquired, the company announced two startup acquisitions of its own that Hollison said will advance the new growth acceleration initiative.

The news comes a day after sources told the Wall Street Journal that Cloudera was close to a sale. Rumors that the company, which went public in 2017, would move to become a private firm once again first emerged last year following several quarters of slower growth. It was reported at the time that Cloudera was holding talks with multiple potential buyers.

The $5.3 billion that KKR and CD&R have agreed to pay represents an offer of $16 per share, a 24% premium to Cloudera’s Friday closing price. The offer values the company at slightly above what it was worth at the time of its 2017 initial public offering. Cloudera’s largest shareholder, activist investor Carl Icahn’s Icahn Group, plans to vote in favor of the deal.

The sale opens yet another new chapter for Santa Clara, California-based Cloudera, which went through multiple major changes through its more than decade-long history. The company launched in 2008 as one of the first players in what would later come to be known as the big-data market. Its original product was a distribution of the open-source Hadoop framework for analyzing unstructured data.

Enterprise adoption of Hadoop rapidly grew during Cloudera’s early years, amid a broader increase in spending on analytics, and the framework soon became a foundational component of large companies’ data projects. Rival Hadoop distributors such as Hortonworks Inc. emerged along the way with significant venture backing. Meanwhile, Cloudera expanded its platform to more analytics use cases by adding on new tools. 

As enterprises’ analytics spending started shifting beyond Hadoop, Cloudera adapted. The company expanded its focus by launching the Cloudera Data Platform, which promises to provide an end-to-end set of tools for managing every core aspect of a company’s data processing operation. CDP incorporates some technology from former Cloudera rival Hortonworks, which Cloudera acquired in 2019 as the Hadoop segment consolidated.

After going private, Cloudera plans to expand its focus to yet more parts of the enterprise analytics workflow. “The company has made significant progress establishing the Cloudera Data Platform (CDP) as a leader in hybrid and multi-cloud analytics, and we believe that our experience and capabilities can offer valuable support to accelerate expansion into new products and markets,” CD&R operating partner Jeff Hawn said in a statement.

The two acquisitions Cloudera announced today are designed to accelerate that expansion. In both deals, the company is buying early-stage startups with technology for running analytics in the public cloud, which is increasingly where enterprises are setting up their analytics projects.

Datacoral Inc. is the first startup Cloudera is acquiring. It provides a software-as-a-service product that companies can use to pull data from systems such as customer databases into their analytics tools. According to Crunchbase, the startup has raised $14 million in funding.

Cloudera’s other acquisition is a Waltham, Massachusetts startup called Cazena Inc. that has raised more than $30 million from backers such as Andreessen Horowitz. Cazena’s software-as-a-service product promises to make it easier to set up data lakes in the cloud for powering analytics and machine learning projects. “Cazena’s technology will enable Cloudera customers to easily and cost-effectively migrate to CDP for Public Cloud,” Cloudera’s Hollison stated. 

“I think this is good news for Cloudera because it now has the capital and flexibility to dive head first into software as a service,” commented analyst Patrick Moorhead of Moor Insights & Strategy.

Cloudera “has been doing really well but to get into SaaS quickly before the aperture shuts required it to go private,” Moorhead explained.  “I am expecting an incredible amount of investment to build out this new capability that I don’t think the public markets would have appreciated. Adding enterprise SaaS opens it up to all non-IT audiences like business leaders and department data jockeys.”

Datacoral and Cazena will enable Cloudera to add cloud-based data integration and data lake capabilities, respectively, to its already expansive portfolio of features. 

The Cloudera Data Platform has tools for automating the process of sharing information between applications. It also provides features for analyzing that information and for visualizing it. Savvy companies can use the platform to train machine learning models or build a data warehouse, while firms looking to simplify their data operations have access to a managed database that takes only a few minutes to set up.

The major cloud providers also offer end-to-end analytics product portfolios designed to support many different types of projects. Amazon Web Services Inc., Google LLC and Microsoft Corp. each offer a large selection of data processing services spanning use cases ranging from data warehousing to machine learning. Cloudera’s acquisition by KKR and Clayton Dubilier & Rice is only likely to increase the already intensive competition in this part of the market.

The deal is expected to close by year’s end.

Cloudera also today reported its fiscal first-quarter earnings results a day earlier than scheduled. The company said it had a net loss of $40.4 million or 14 cents a share, improving from a loss of $58 million, or 20 cents a share, a year ago. Revenue rose 7%, to $224.3 million.  Subscription revenue also rose 7%, to $200.7 million, and annualized recurring revenue grew 12%.

The company won’t report guidance for the rest of the year.

With reporting from Robert Hof

Image: Cloudera