IBM Eyes Confluent in $11 Billion Deal to Bolster AI and Cloud Push
A potential acquisition would value the data-streaming firm at a nearly 60% premium, continuing IBM's software buying spree under CEO Arvind Krishna.
International Business Machines Corp. is in advanced discussions to acquire Confluent Inc., a data-streaming software company, for approximately $11 billion, a move that would significantly deepen its capabilities in real-time data and artificial intelligence.
The potential deal, first reported by The Wall Street Journal, would represent one of IBM's largest acquisitions in recent years and underscores CEO Arvind Krishna’s aggressive strategy to transform the century-old technology giant into a hybrid cloud and AI powerhouse.
Based on Confluent's market capitalization of approximately $8.1 billion as of Friday's market close, the $11 billion price tag implies a valuation of roughly $36.83 per share. This represents a substantial premium of nearly 60% over Confluent's closing price of $23.14, signaling IBM's serious intent to capture a critical piece of the modern data infrastructure market.
Shares of Confluent were indicated to surge in pre-market trading on the news.
Strategic Fit: The Data Engine for AI
For IBM, acquiring Confluent is a direct investment in the foundational technology that powers modern AI applications. Confluent, founded by the original creators of the open-source software Apache Kafka, has built an enterprise-grade platform that allows companies to process massive streams of data in real time. This capability is essential for everything from fraud detection and mobile banking to feeding the complex algorithms behind generative AI models with up-to-the-minute information.
This acquisition would slot neatly into IBM's existing software portfolio, which has been reshaped by major purchases. The landmark $34 billion acquisition of Red Hat in 2019 provided the hybrid-cloud operating system, while the more recent $6.4 billion purchase of HashiCorp added crucial cloud-automation tools. Confluent would provide the real-time data “plumbing,” creating a comprehensive platform for enterprises building and deploying AI at scale.
“This move is consistent with IBM's focus on building out its hybrid cloud and AI offerings,” noted one technology analyst. “While Red Hat provides the platform and HashiCorp automates the infrastructure, Confluent would deliver the nervous system for the modern, data-driven enterprise.”
Confluent’s Critical Role
Confluent has successfully commercialized Apache Kafka, turning a powerful but complex open-source project into a managed, cloud-native service used by thousands of organizations, including a large portion of the Fortune 500. The company’s platform helps businesses manage the torrent of data generated by websites, mobile apps, and connected devices, ensuring that information flows reliably to analytics systems and customer-facing applications.
Despite a challenging software market, Confluent has demonstrated strong growth. In its most recent quarter, the company reported a 19% year-over-year increase in subscription revenue, reaching $286.3 million, highlighting the persistent enterprise demand for real-time data capabilities.
An acquisition by IBM would provide Confluent with access to a vast global sales and consulting organization, dramatically accelerating its reach into large enterprise accounts that are central to IBM's business.
IBM’s M&A-Driven Transformation
The potential deal for Confluent is the latest and one of the boldest moves in Krishna’s tenure. Since taking the helm in 2020, he has focused the company on the high-margin software and consulting markets, spinning off its managed infrastructure business (now Kyndryl) and making a series of strategic acquisitions to bolster its AI and cloud credentials.
If completed, the transaction would be IBM’s second-largest since the Red Hat deal. While the talks are advanced, sources familiar with the matter cautioned that they could still fall apart and a final agreement is not guaranteed.
The potential acquisition signals a vibrant M&A landscape for specialized software firms, particularly those with technologies considered indispensable for the widespread adoption of artificial intelligence. For IBM, it would mark another decisive step away from its legacy hardware business and toward a future defined by software and data.