App development tools vendor to buy DevOps and DevSecOps expert for $220 million
Progress Software is adding DevOps and DevSecOps capabilities to its development tools portfolio, as well as a vibrant open-source community with the planned acquisition of Chef.
The Lowdown: Progress, based in Bedford, Massachusetts, announced the deal Tuesday, saying it will pay $220 million for 12-year-old Chef, which according to Crunchbase has raised about $105 million over that time. The acquisition is expected to close next month.
The Details: Through the deal, Progress will inherit Chef’s continuous automation and application automation expertise to help enterprise more efficiently build software for multicloud and hybrid cloud environments. It also will get a company with more than $70 million in annual recurring revenue and a developer community that Chef has looked to grow since going 100% open-source last year.
Chef, headquartered in Seattle, offers a range of products for such areas as desktops and workstations, infrastructure automation, security, and applications. It also revamped its channel program in February, aiming to make it easier for partners to take advantage of the open-source model. That move came a month after Progress rolled out its own enhanced partner program.
In a statement, Progress CEO Yogesh Gupta said the deal for Chef aligns with the company’s larger growth strategy, including acquiring companies that have strong recurring revenue, complementary technology, a strong customer base, and the ability to leverage Progress’ operating model and infrastructure.
Most of Chef’s customers come from the Fortune 500 roster, including Disney, Facebook, General Electric, and IBM.
The Impact: Chef moved away from its previous open-core model of using proprietary tools along with open-source products to a model where those once-proprietary products are now open-source. Officials said the move was made on the belief that open source is the best way to develop software and offer clarity for customers and partners that may have been unsure which products were proprietary and which were open-source.
Background: Also Tuesday, Progress released preliminary financial results for its fiscal third quarter, which included net income expected to come in between $108 million to $110 million, up from a previous estimate by the company of $103 million to $108 million.
The Buzz: “Chef is a market leader with best-in-class products, a vibrant developer community, an impressive blue-chip customer base, and highly skilled and engaged employees,” Gupta said. “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.”
“Chef and Progress share a vision for the future of DevSecOps and Progress will provide the scale to further drive Chef’s platform forward and deliver additional value to our customers,” Chef CEO Barry Crist said. “At the same time, Chef fills a need in the Progress portfolio in DevSecOps, infrastructure, application, and compliance automation that is highly complementary to its existing products. 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.”