Cloud infrastructure is seeing an upward trend as it has proven potential to solve several business problems, from cybersecurity, scalability, and access control to disaster recovery. To that end, major players and budding startups in the cloud infrastructure space started focusing on creating impactful IT and cloud solutions. This innovation streak invited giants from neighboring sectors to invest, acquire, or merge with the other cloud players. The cloud computing industry has witnessed a dynamic landscape shaped by a flurry of mergers and acquisitions (M&A) activity in recent years. GlobalData’s Tech, Media and Telecom (TMT) Industry Mergers and Acquisitions Deals stated that in Q1 2023, the cloud segment had 277 technology deals worth USD 5.4 billion.
As organizations across the globe increasingly rely on cloud technologies to drive innovation, streamline operations, and enhance scalability, M&A deals have become strategic tools for cloud service providers and tech giants alike. These transactions are driven by various factors, including the quest for technological innovation, expanding market share, and the desire to offer comprehensive, end-to-end cloud solutions.
M&A activities in the cloud space often involve established players acquiring startups with innovative technologies, consolidating data center infrastructure, or broadening their service portfolios to cater to diverse customer needs. Such transactions redefine the competitive landscape and shape the future of cloud computing, offering customers a wider array of services and enhancing the overall ecosystem’s maturity.
Here is a list of top mergers and acquisitions in the cloud infrastructure in 2023 so far.
January:
Dell’s Entry into Cloud Software Deepens with Acquisition of Cloudify
Following the divestment of its VMware stake, Dell has repositioned itself in the cloud software arena by acquiring Cloudify, an Israeli startup renowned for its cloud orchestration platform, which streamlines provisioning processes for DevOps teams. Cloudify is an open-source, multi-cloud orchestration platform. It offers a combination of technology, including infrastructure, networking, and existing automation tools, into certified blueprints. The platform, known for its environment-as-a-service, empowers customers to manage diverse cloud environments at scale while bridging the gap between DevOps and IT service management (ITSM). Cloud architects and DevOps engineers leverage the company tools to oversee containers, workloads, and more across hybrid environments.
February:
F5 Enhances App Security and Optimization Portfolio with Lilac Cloud Acquisition
Seattle-based application security and delivery giant F5 has acquired Lilac Cloud, a Silicon Valley computer networking startup specializing in cloud-based services for gaming, app downloads, event broadcasting, app security, e-learning, and more. This acquisition bolsters F5’s app security and optimization tools portfolio, aligning with its strategy to expand its offerings in these areas. F5, Inc. initiated the merger agreement with Lilac Cloud, Inc. on January 22, 2023, and successfully completed the acquisition on February 1, 2023, making Lilac Cloud a wholly-owned subsidiary of F5, Inc.
March:
Cisco acquires Lightspin Technologies, a cloud security software company in Israel
In March, Cisco announced its acquisition of Lightspin Technologies, a leading Israeli cloud security software company. Lightspin’s cutting-edge solution specializes in comprehensive cloud security posture management (CSPM) for cloud-native resources. Leveraging advanced graph-based technology, Lightspin delivers crucial context, prioritization, and actionable remediation recommendations for cloud security.
This strategic acquisition is anticipated to involve an investment ranging from USD 200 million to USD250 million by Cisco. By joining forces with Lightspin, Cisco aims to enhance its ability to assist customers in safeguarding their vital data, applications, and infrastructure. This move underscores Cisco’s commitment to delivering robust and holistic cloud security solutions, aligning with the evolving needs of organizations in an increasingly cloud-centric landscape.
May:
IBM Strengthens Cloud Data Protection with Polar Security Acquisition
IBM has officially confirmed its acquisition of Polar Security, which will be integrated into its Guardium unit. This integration will enable IBM customers to identify security risks and compliance violations more effectively. Backed by USD 8.5 million in funding from investors such as Gilot, IBI, and several individuals, Polar Security recently emerged from stealth mode. IBM has invested USD 60 million in this acquisition, underscoring its commitment to enhancing data protection in the cloud.
June:
IBM’s Strategic Move to Acquire Apptio for USD 4.6 Billion
IBM has agreed to purchase Apptio, a specialist in cloud cost control, from private equity firm Vista, which has owned Apptio since 2018. IBM plans to integrate Apptio’s offerings into its IT automation portfolio, including AIOps, Instana, and Turbonomics, enabling enterprises to optimize application cost and performance through a centralized control center. Additionally, this acquisition will grant IBM access to anonymized data reflecting USD 450 billion in IT spending, which will be invaluable for training AI tools to achieve further optimization.
IBM Expands Hybrid Cloud Consulting with Acquisition of Agyla SAS
IBM’s acquisition spree continues in 2023 with the purchase of Agyla SAS, a cloud platform engineering services provider, to enhance its offering for French clients. IBM will integrate Agyla into IBM Consulting to improve its portfolio of hybrid multi-cloud services while strengthening its hybrid cloud and AI strategy in the region. Agyla SAS, founded in 2013, specializes in delivering cloud platform engineering services, aiding clients in constructing mission-critical hybrid cloud infrastructure and applications.
July:
DigitalOcean Boosts Cloud Capabilities with Paperspace Acquisition
DigitalOcean, a prominent player in cloud hosting, has announced its acquisition of Paperspace, a New York-based cloud computing and AI development startup, in a cash deal worth USD 111 million. Co-founded by University of Michigan graduates Daniel Kobran and Dillon Erb, Paperspace is funded by Y Combinator and Jeff Carr, one of DigitalOcean’s co-founders. Paperspace operates its own data centers featuring custom-configured GPUs. The company was invested in low-cost virtual machines. In recent years, it has moved towards AI, offering tools for developing, training, deploying, and hosting AI models in the cloud. This acquisition strengthens DigitalOcean’s position in the cloud computing landscape.
The cloud infrastructure space continues to expand rapidly. This year, the mergers and acquisitions focused on long-term sustainable opportunities and a strong digital transformation. To that end, large companies have started investing in this sector as businesses increasingly rely on cloud services. While the first half of the year was slow to pick up, the promise of the industry is expected to invite new deals in the near future.
