Confluent Surges on Report of $11 Billion IBM Takeover
The potential deal values the data-streaming company at a significant premium, signaling IBM's aggressive push into hybrid cloud and AI.
Shares of Confluent (CFLT) soared in trading following a report that International Business Machines Corp. (IBM) is in advanced talks to acquire the data-streaming software company for approximately $11 billion.
The potential acquisition, first reported by The Wall Street Journal, would mark a significant step in IBM's strategy to bolster its portfolio in hybrid cloud and artificial intelligence.
The reported offer values Confluent at a substantial premium, representing a roughly 36% markup over its recent market capitalization of approximately $8.1 billion. Based on Confluent's outstanding shares, the deal implies a price of about $36.82 per share, pushing the stock towards its 52-week high of $37.90.
For IBM, the acquisition would be one of its largest in recent years and underscores a focused effort to capture a larger share of the modern data infrastructure market. Confluent is the primary commercial entity behind Apache Kafka, a popular open-source technology that enables companies to process massive streams of data in real time. This capability is increasingly critical for powering generative AI applications, machine learning models, and real-time analytics, which require a constant, reliable flow of fresh data.
The move aligns with IBM's broader strategic pivot under CEO Arvind Krishna, who has steered the technology giant towards high-growth software and services markets. This strategy was notably demonstrated by IBM's $34 billion acquisition of Red Hat in 2019 and, more recently, its planned acquisition of HashiCorp. Adding Confluent would directly complement IBM's existing software portfolio, including its Watsonx AI platform, by providing a crucial data-in-motion layer for its hybrid cloud offerings.
"This potential deal fits squarely into IBM's strategy of acquiring key software players to build out its hybrid cloud and AI capabilities," said one market analyst. "Real-time data is the fuel for modern AI, and Confluent is a leader in that space. It gives IBM a much stronger story to tell enterprise clients who are operationalizing artificial intelligence."
Confluent, based in Mountain View, California, was founded by the original creators of Kafka. The company has successfully built a business by providing enterprise-grade features, security, and managed cloud services on top of the open-source project. For its most recently reported quarter, Confluent posted a 19.3% year-over-year increase in revenue, though it has yet to achieve profitability as it continues to invest in growth.
While neither IBM nor Confluent have publicly commented on the report, the deal, if finalized, would likely face regulatory scrutiny. However, it highlights the intense competition among major technology firms to own the essential infrastructure that underpins the digital economy.
IBM's stock showed a muted reaction to the news, which is typical for an acquiring company facing a large cash or stock outlay. The acquisition would be a bet that integrating Confluent’s high-growth platform can accelerate IBM's own growth trajectory and solidify its position as a foundational partner for enterprises navigating digital transformations.