IBM, Driven by AI, Hybrid Cloud, to Buy HashiCorp for $6.4 Billion

Speculated earlier in the week to be in the works, IBM on Wednesday confirmed that it will buy HashiCorp, the multicloud infrastructure automation company, for $6.4 billion.

HashiCorp brings to IBM infrastructure and security life-cycle management capabilities that help businesses automate their hybrid and multicloud environments.

IBM says acquiring HashiCorp reflects its "deep focus and investment" in both artificial intelligence and hybrid cloud. The IT behemoth sees these technologies working hand in hand. As the number of cloud workloads by enterprises grows rapidly, so does AI deployment alongside traditional workloads. IBM further notes that HashiCorp's approach to multicloud management complements its own commitment to deepening and expanding its partnerships with the hyperscaler cloud providers.

"Our strategy at its core is about enabling companies to innovate in the cloud, while providing a consistent approach to managing cloud at scale. The need for effective management and automation is critical with the rise of multicloud and hybrid cloud, which is being accelerated by today's AI revolution," said Armon Dadgar, HashiCorp co-founder and chief technology officer.

HashiCorp's Armon Dadgar

Moreover, Dadgar expects IBM's acquisition of his company to expand access to its products "to an even broader set of developers and enterprises."

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The deal, which IBM expects to close by the end of the year, accelerates the company's growth in what it calls its "key focus areas": Red Hat, watsonx, data security, IT automation and consulting.

IBM also expects to snag a bigger share of the total cloud market, which IDC valued at $1.1 trillion in 2023.

Furthermore, the company anticipates the acquisition of HashiCorp will make its shareholders happy. It expects to achieve "substantial near-term margin expansion" for the acquired business.

Perhaps most importantly, IBM chairman and CEO Arvind Krishna says acquiring HashiCorp will ultimately reduce cloud complexity for a vast swath of enterprises.

IBM's Arvind Krishna

"Enterprise clients are wrestling with an unprecedented expansion in infrastructure and applications across public and private clouds, as well as on-prem environments," he said. "The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies. HashiCorp has a proven track record of enabling clients to manage the complexity of today's infrastructure and application sprawl. Combining IBM's portfolio and expertise with HashiCorp's capabilities and talent will create a comprehensive hybrid cloud platform designed for the AI era."

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HashiCorp has 4,400 clients that include media giants Bloomberg and Comcast; financial giants Deutsche Bank and JP Morgan Chase; retailer Starbucks; and European telecom colossus Vodafone, to name a few.

HashiCorp sports roughly 250 technology partners − including the big three cloud providers − and 650 systems-integrator and reseller partners. In terms of technology, it's probably best known for its Terraform infrastructure-as-code tool, which provides organizations with a single workflow to provision their cloud, private data center and SaaS infrastructure, while continuously managing it through its life cycle.