Two private equity firms, KKR & Co. and Clayton Dubilier & Rice are teaming up on a deal to acquire Cloudera, a big-data specialist firm. The report about the deal was first broken by The Wall Street Journal, which quoted people close to the matter.
It said that the deal could be finalized by Tuesday, assuming the tasks do not somehow implode at the last minute. The terms of the deal are still under wraps.
As of the close of trading Friday, Cloudera had a market cap of $3.78 billion.
The private equity firms
Both firms are known as prolific acquirers of companies. Tracxn reports that KKR has made 150 acquisitions since its founding in 1976. Notable acquisitions done by KKR in tech include BMC Software, which was a $10 billion deal in 2018.
Others include Optiv Security in 2016 and Corel Corp. in 2019. Clayton Dubilier & Rice has made 23 acquisitions across different industries.
As with any private equity group, both firms want to buy the companies so they can turn them around through cost-cutting or reform, before selling them off for profit.
Private equity prey
The whole point of private equity firms is that they take companies with room or improvement and then make them as profitable as possible before selling them off. Sometimes, it doesn’t work out too well for the employees but that usually doesn’t matter since the main agenda is profit.
If the deal goes through, it will take Cloudera private for the first time since its IPO in 2017.
Cloudera shares have had a troubled run since the IPO and are currently trading below $18.10, with the peak being $22.87 in June 2018. Since then, they have not come close, making the company a prime target for private equity firms.
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