In one of its largest acquisitions ever, IBM today announced its intention to acquire HashiCorp in a deal valued at $6.4 billion. The deal is expected to close by the end of the year.

Under the terms of the deal, IBM will pay $35 in cash for each of HashiCorp's public shares as listed on the NASDAQ stock exchange (NASDAQ:HCP). HashiCorp was founded in 2012 and had its initial public offering (IPO) in 2021. The company is well-known for its suite of developer, infrastructure and cloud tools, which include Terraform infrastructure-as-code (IAC), Consul service-based networking, Nomad container orchestration,Vagrant environment workflows and Vault secrets management technologies.

“As generative AI [genA] deployment accelerates alongside traditional workloads, developers are working with increasingly heterogeneous, dynamic and complex infrastructure strategies,” Arvnind Krishna, CEO of IBM said on an investor call. “HashiCorp has a track record of helping clients manage the complexity of today's infrastructure by automating, orchestrating and securing hybrid and multi cloud environments.”

IBM says HashiCorp will complement its Red Hat business unit

During the investor call, Krishna emphasized that the goal is not to roll HashiCorp into Red Hat's operations.

Rather he stressed that HashiCorp's technology will help to accelerate demand for Red Hat technologies, as well as the broader IBM software portfolio.

“HashiCorp is a great strategic addition to our portfolio, extending Red Hat's hybrid cloud capabilities to provide end to end automated infrastructure and security lifecycle management,” Krishna said. “HashiCorp's technology is foundational to enabling the transition to hybrid and multi cloud and TerraForm is the industry standard for infrastructure automation for these environments.”

He also emphasized that HashiCorp's security capabilities are also attractive to IBM. Krishna said that with organizations worried about securing password secrets and access, there is a lot of value that HashiCorp's technologies will bring to IBM clients.

But what about open source?

HashiCorp is currently embroiled in some open source drama.

The drama ensued after the company changed the license for Terraform from an industry standard open source license to a pseudo-open license. That license change did not sit well with the open source community, leading to a fork known as OpenTofu, which is now a project run under the Linux Foundation.

Earlier this month, lawyers for the Linux Foundation and HashiCorp traded barbs over alleged license violations with OpenTofu.

IBM is a founding member of the Linux Foundation and a stalwart supporter of open source overall. During the investor call, the company made no mention of the open source drama surrounding HashiCorp.

An IBM spokesman told SDxCentral that with the deal closing at the end of the year to acquire HashiCorp, he could not comment. That said, he noted that IBM’s commitment to open source and its track record is very clear – with its leadership in Linux, with Red Hat..

Will IBM dominate open source IT automation?

Open source drama aside, until late 2023 Terraform was an open source licensed technology and it still dominates the infrastructure as code landscape.

Kris Beevers, co-founder and CEO of NetBox Labs, who sold his prior company NS1 to IBM in 2023 has an optimistic view on the acquisition.

“With an acquisition of HashiCorp, IBM will consolidate ownership of the two most prevalent open source IT automation tools -- Red Hat's Ansible and HashiCorp's Terraform,” Beevers said. “In network management and automation specifically, Ansible and Terraform dominate the ecosystem and are widely deployed by practitioners.”