The UK's antitrust authority has initiated a formal investigation into IBM's proposed acquisition of HashiCorp, valued at $6.4 billion. The Competition and Markets Authority (CMA) seeks to determine if this merger would result in a significant reduction of competition within the UK market. Interested parties are encouraged to submit comments by January 16, with a decision on whether to refer the transaction for more in-depth examination expected by February 25. In a reaction to this development, IBM, a global leader in technology solutions, declined to comment, while HashiCorp did not respond to inquiries about the deal.
As a consequence of the investigation, IBM's stock saw a decline of 1.1% during midday trading, whereas HashiCorp's shares remained relatively stable. The proposed merger was initially agreed upon in April, when IBM announced its intention to acquire HashiCorp for $35 per share in cash. This acquisition is envisioned to enhance IBM's presence in multi-cloud technology, thereby expanding its addressable market and enabling the company to provide a broader range of hybrid and multi-cloud offerings to its enterprise clients.
HashiCorp serves more than 4,400 clients, including major corporations such as Bloomberg, Comcast, and Starbucks, as highlighted in a joint statement released earlier this year. Additionally, earlier this year, the U.S. Federal Trade Commission also began an investigation into the deal, requesting supplementary information.
HashiCorp indicated in a regulatory filing in July that it still anticipates the deal’s closure by the end of 2024, maintaining the timeline that was originally established between both parties. In summary, this investigation by the CMA into IBM's attempt to acquire HashiCorp underscores the regulatory scrutiny that significant mergers and acquisitions face, particularly in technology sectors where competition is of paramount importance.
Investors and industry watchers will be keeping a close eye on the outcomes as they unfold in the coming months..