Cloudera and Hortonworks were bleeding cash as the two data software providers spent years going head-to-head to lure businesses onto their fledgling technology. As of Thursday, they can join forces against a common enemy: Amazon.
The all-stock deal unites the two most prominent vendors of Hadoop open-source software, which customers can use to store, process and analyze many different types of data. Valued at $5.2 billion when the merger was announced in October, the companies are worth just a combined $3 billion as of its official close.
The stocks plunged in the fourth quarter amid the market sell-off and specific concerns about whether Cloudera — the name of the combined entity — has a compelling enough story to take on Amazon Web Services. For all of 2018, a year that was a boon for many cloud stocks, Cloudera shares fell 33 percent and Hortonworks dropped 29 percent.
"The big competitor for us is Amazon, with their house offerings," Cloudera CEO Tom Reilly told CNBC in an interview last month, in preparation of the deal's closure. "We're gearing up to take on Amazon."
The Cloudera-Hortonworks merger fit into a big technology theme in 2018 — the growth of open source. IBM bought Red Hat for $34 billion, Microsoft acquired GitHub for $7.5 billion and Salesforce purchased MuleSoft for $6.5 billion. Elastic, whose software helps companies embed search functions in their apps, had one of the bigger IPOs of the year and is now valued at about $5 billion.