Britain’s Competitions & Markets Authority is to investigate IBM’s acquisition of HashiCorp. It has launched a “launch of merger inquiry” on the eve of 2024, with a deadline for a final decision on Feb. 25 in the new year.
The CMA is inviting parties to comment before Jan. 16. This is not just limited to IBM and HashiCorp. Competitors concerned about the potential disruption of competition caused by the deal can also come knocking. As is often the case, the CMA’s message at this stage of the investigation is short and to the point. In fact, the only announcement is that a “Phase 1 investigation” has commenced. It will now be determined whether Phase 2 is necessary, after which an independent panel of experts will consider the implications for a possible takeover. A move to this new phase would likely delay the closing of the acquisition further.
Two fronts
In April, IBM confirmed that it wanted to buy HashiCorp for $6.4 billion, just under 6 billion euros at the time. Although Red Hat already belongs to Big Blue’s stable, IBM plans to make HashiCorp an IBM unit focused on cloud infrastructure. This will keep Terraform separate from Red Hat offerings.
The main prize for IBM, should the deal be allowed, would be HashiCorp’s Terraform tool. With this solution, organizations automate the setup of cloud instances and allocated hardware resources. Other cloud tools focus on security, networking and development environments. Users can access cloud-based variants of these tools through the HashiCorp Cloud Platform (HCP).
The stated ambition by both parties was to complete the takeover before the end of 2024. Those armed with a calendar, however, can readily see that this will tricky to pull off. In addition to the CMA, the US Federal Trade Commission (FTC) has also been investigating the takeover attempt since July.
No certainty yet
Because of this initial investigation by the British antitrust watchdog, the viability of IBM’s takeover of HashiCorp is uncertain at this time. Nevertheless, nothing can be gleaned from the basic fact that an investigation has been launched into the matter. For example, the Broadcom acquisition of VMware was finally approved by the CMA in August 2023 after an investigation was launched in January of that year. However, it needn’t come to an actual CMA decision sometimes for an acquisition attempt to be scuttled. During the CMA investigation over Nvidia’s acquisition of Arm, the latter decided to call a halt to proceedings on its own.
Also read: US antitrust watchdog wants more details on IBM’s acquisition of HashiCorp