11 Sep Ofer Eitan Writes: Why Progress (PRGS) Is Buying Chef For $220 Million In Cash
- Progress recently announced it entered an agreement to buy Chef for $220 million in cash. This is why.
Progress (NASDAQ: PRGS) — a leading provider of application development and digital experience technologies — recently announced it entered into a definitive agreement to buy Chef for $220 million in cash. Chef is a global leader in DevOps and DevSecOps and the deal will provide complete infrastructure automation to build, deploy, manage and secure applications in modern multi-cloud and hybrid environments as well as on-premises.
Launched in 2008, Chef now has over $70 million in ARR. And Chef has become a leader in continuous automation, an innovator in application automation, and a pioneer of the DevSecOps movement. Chef’s mission is to help the most transformative companies use technology to become fast, efficient, and innovative software-driven organizations. The company’s products Chef Enterprise Automation Stack, Chef Infra, Chef InSpec, Chef Habitat, Chef Compliance, and Chef Desktop.
The deal is expected to close in October 2020, subject to obtaining regulatory consents and satisfaction of other customary closing conditions.
Why Is Progress Buying Chef?
Progress CEO Yogesh Gupta said that Chef is known as a market leader with “best-in-class products, a vibrant developer community, an impressive blue-chip customer base, and highly skilled and engaged employees.” Progress plans to expand and accelerate Chef’s successful product portfolio and go-to-market strategy.
Progress has become a trusted provider of some of the best products to develop, deploy, and manage high-impact business applications. Chef will enhance this position by providing industry-leading compliance and application automation products for multi-cloud and on-prem infrastructure.
Plus the acquisition will bolster Progress’ core offerings, thus enabling customers to respond faster to business demands and improve efficiency. And the acquisition also aligns with Progress’ growth strategy through accretive acquisitions and will add both scale and cash flow.
“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,” added Gupta. “We’re thrilled to add Chef to our product portfolio and are confident that this acquisition will provide benefit to both organizations, as well as our customers, partners, investors and the Chef community.”
Progress will fund the deal with existing cash on hand and funds secured under its existing credit facility. And the transaction is expected to be accretive beginning in Q1 FY2021 to both non-GAAP earnings per share and cash flow.
“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,” explained Barry Crist, CEO, Chef. “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.”