Application development firm Progress is to acquire DevOps and automation software provider Chef in a $220 million (£168.6m) cash deal.
The acquisition of Chef, which has more than $70m in annual recurring revenue, will ‘bolster Progress’ core offerings’, as well as aligning with its ‘growth strategy through accretive acquisitions… [adding] both scale and cash flow’, Progress said.
The company added that the combination of Chef’s ‘vibrant’ developer community, as well as its blue-chip customers – including Capital One, IBM and Standard Bank – made it an attractive proposition.
“Chef has built a successful business, product portfolio and go-to-market strategy and we will expand and accelerate that by bringing our resources to bear, building on the momentum Chef has established to date,” said Yogesh Gupta, Progress CEO, in a statement.
“This acquisition perfectly aligns with our growth strategy and meets the requirements that we’ve previously laid out: a strong recurring revenue model, technology that complements our business, a loyal customer base and the ability to leverage our operating model and infrastructure to run the business more efficiently,” Gupta added.
Part of this complementary nature is down to open source commitments. In April last year, Chef announced it would commit to moving open source for all of its software going forward, including enterprise-centric products. Progress committed to open source as far back as the turn of the millennium, as can be evinced today in products such as Telerik.
The price tag of $220m can therefore be analysed among other open source software deals in recent years. Price-wise, the closest sibling is arguably Red Hat’s acquisition of container software provider CoreOS for $250m at the beginning of 2018. The tinderbox was truly lit later that year, however, when Red Hat was bought by IBM for $34 billion; not to mention Microsoft acquiring GitHub for $7.5bn.
This led to thoughts in the industry around where open source technologies best resided, and how the traditional behemoths would treat their new purchases. Writing for The Next Web last April, Pedro Anderson, of Winding Tree, noted the changing landscape. “Big tech giants have come a long way since the dark days of Microsoft’s all-out battle against Linux and open source,” he wrote.
IBM CEO Arvind Krishna, in taking over the top role in April, made a specific note of the company’s open source leadership as key. Yet this conversation has evolved and become an undercurrent of debate in the cloud space through 2019. Open source database providers, such as Redis Labs, Confluent and MongoDB, have made changes to their license offerings because of ‘differing’ approaches from the largest cloud providers.
Given Progress’ heritage therefore, Chef’s leadership will feel it has found a good new home. “Chef fills a need in the Progress portfolio in DevSecOps, infrastructure, application, and compliance automation that is highly complementary to its existing products,” said Barry Crist, CEO of Chef.
“For Chef, this acquisition is our next chapter, and Progress will help enhance our growth potential, support our open source vision, and provide broader opportunities for our customers, partners, employees, and community,” Crist added.
The acquisition is expected to close in October subject to usual regulatory consents and conditions.
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