Higher interest rates are not stopping mergers. IMO part of the continuing merger trend without paying cash for a deal.
Cloudera and Hortonworks Go Together Like PB&J, Analyst Says --
Barrons.com
BY Dow Jones & Company, Inc.
— 10:40 AM ET 10/04/2018
Investors are cheering the anticipated combination of Cloudera ( CLDR) and Hortonworks ( HDP) , which the companies are calling "an all-stock merger of equals."
Cloudera ( CLDR) , which makes a cloud-based machine-learning platform, and Hortonworks ( HDP), which provides data-management platforms, argue that they have complementary businesses that can be combined to help companies make better sense of vast troves of data. Cloudera ( CLDR) shares were up 12.7% Thursday morning, while Hortonworks' ( HDP) stock was up 12.9%.
Analysts were upbeat about the merger, which was announced Wednesday afternoon. Instinet's Christopher Eberle dubbed it a "game changer." He believes that the combined entity will be able to achieve "material operating leverage in a short period of time," and sees many opportunities for synergies given that the companies have little overlap in their customer bases.
He upgraded Cloudera ( CLDR) shares to Buy from Reduce after the announcement and raised his target on the stock to $23. That increases his Hortonworks ( HDP) price target to $30 based on deal terms. Upon completion, Cloudera ( CLDR) shareholders will hold 60% of the joint entity.
Stifel's Brad Reback also praised the deal, in a note titled "1 + 1 = 3." He, too, sees cross-selling potential once the companies merge.
"The combined company will be able to offer a much broader set of products to its customer base that will span the data warehousing, machine learning, AI, and data management spaces," he wrote. Reback upped his target price on Cloudera's ( CLDR) stock to $25 from $22.
Rosenblatt's Marshall Senk chimed in as well, arguing in favor of the synergies the deal could offer.
"This deal makes all the sense in the world and frankly should have happened a year or two ago," he wrote. "Both teams can stop battling each other and focus instead on growing the end market."
Needham analyst Jack Andrews, meanwhile, commented that the two companies go together "like peanut butter and jelly." He thinks that the companies have different strengths, due to Cloudera's ( CLDR) focus on data warehouses and out-of- the-box analytics and Hortonworks' ( HDP) advantage in Internet of Things and edge computing, where companies own and operate their own computer hardware, rather than renting capacity via the cloud.
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(END) Dow Jones Newswires 10-04-18 1040ET Copyright (c) 2018 Dow Jones & Company, Inc.
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