As the company’s name implies, Cloudera (NYSE:CLDR) is an enterprise data cloud business. The company has been tradable as CLDR stock for years, but reportedly there’s a big change coming up.
Two firms in particular have shown special interest in Cloudera — so much interest, in fact, that apparently there’s a multi-billion-dollar transaction afoot.
Whether you’re a current or prospective investor in CLDR stock, you’ll definitely want to get the scoop on recent developments as they could affect you.
Don’t worry — it’s not terrible news. It might be disappointing, though, for retail investors who’ve had long-term plans to profit from Cloudera shares.
A Closer Look at CLDR Stock
For folks who never took a position, maybe it will make you feel better to know that CLDR stock isn’t perfect. The stock appears to have peaked in mid-2017 at around $23 and never managed to recover to that level.
There was a run-up in February of this year to the $19 area, but that was followed by a retreat to $12.
As of June 23, 2021, CLDR stock is trading at $15.77. At the same time, Cloudera had trailing-12-month earnings per share of -48 cents.
That’s not a deeply negative number for a $16-ish stock. Still, it’s hard to be overly enthusiastic about a company with non-positive per-share earnings.
There’s no dividend to speak of here, so multi-year investors might not have seen a profit yet, depending on when they acquired the shares.
A Huge Deal
The news came in early June, and InvestorPlace contributor William White was quick and accurate with the details. CLDR stock shot up roughly 24%, but that’s not the main headline. More important was the reason for the price jump.
Evidently, investment firms Clayton, Dubilier & Rice and KKR are planning to take Cloudera private.
We’re talking about an all-cash, $5.3 billion takeover deal here. And reportedly, KKR is using its North American private equity funds for this transaction.
You might not be familiar with the name KKR, but you’ve probably heard of some of the companies the firm controls. These include GoDaddy, Internet Brands, Epicor, BMC, Optiv, Calabrio, Corel and 1-800 Contacts.
Meanwhile, Clayton, Dubilier & Rice own Epicor, Capco, m2gen, Sirius Computer Solutions and TRANZACT.
According to the press release, the transaction is expected to close during 2021’s second half and will result in Cloudera becoming a private company.
Technically speaking, it’s not a done deal yet. Cloudera’s board of directors unanimously approved the transaction, but the shareholders still need to approve the transaction and adopt the merger agreement.
What Happens Next?
That having been said, it’s highly likely that the shareholders will approve the takeover deal, in my humble opinion.
From what I’ve seen, it’s unusual for the shareholders to block a takeover when the company itself is pushing for it. The point is, Cloudera will almost certainly become a private company.
So, why would Cloudera agree to the takeover? I’m guessing it’s because the company would benefit from the massive capital infusion, but I’ll let CEO Rob Bearden state his case:
“We believe that as a private company with the expertise and support of experienced investors such as CD&R and KKR, Cloudera will have the resources and flexibility to drive product-led growth and expand our addressable market opportunity.”
Fair enough. In any case, it’s probably not a coincidence that the CLDR stock price moved toward $16 after the takeover announcement.
Apparently, Cloudera shareholders will receive $16 in cash per share. So, they’ll get a decent payout, but of course, they’ll be relinquishing their shares.
The Bottom Line
The takeover deal with probably go through, and CLDR stock holders will likely end up getting a cash payout.
That would mean selling the shares. This might be disappointing to folks who had a positive long-term outlook.
Still, I would recommend continuing to keep an eye on Cloudera. Something tells me that we’ll be hearing about this company again soon.
In the meantime, watch this space for further developments as Cloudera undergoes its biggest transition.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.