HashiCorp, Inc. (NASDAQ:HCP) shares are trading higher in the premarket session on Thursday, while International Business Machines Corporation (NYSE:IBM) shares are slumping.

Yesterday, IBM announced that it entered into a definitive agreement to acquire HashiCorp for $35 per share in cash, representing an enterprise value of $6.4 billion.

According to Benzinga Pro, HCP stock has gained over 18% in the past year.

The acquisition will create the opportunity to deliver more comprehensive hybrid and multi-cloud offerings to enterprise clients. This will enhance IBM’s ability to address the total cloud opportunity, which had a TAM of $1.1 trillion in 2023, with a compound annual growth rate in the high teens through 2027.

The boards of directors of IBM and HashiCorp have both approved the transaction. 

“The global excitement surrounding generative AI has exacerbated these challenges and CIOs and developers are up against dramatic complexity in their tech strategies,” said Arvind Krishna, IBM chairman and chief executive officer.

It is anticipated that the transaction will be accretive to Adjusted EBITDA within the first full year, post close, and free cash flow in year two.

The acquisition is subject to approval by HashiCorp shareholders. The transaction is expected to close by the end of 2024.

Price Action: IBM shares are trading lower by 8.96% to $167.61 premarket at last check Thursday, while HCP shares are trading higher by 4.7% to $32.90.

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