IBM plans to purchase Confluent in an $11 billion deal, a transfer that expands its knowledge and cloud portfolio as demand for AI methods grows. The corporate has been build up its cloud and software program items beneath CEO Arvind Krishna, who has targeted on acquisitions to satisfy curiosity from purchasers upgrading their methods for extra advanced AI work.
Confluent, based mostly in Mountain View, California, builds instruments that deal with giant, real-time knowledge flows. These instruments are sometimes wanted to coach and run AI fashions.
“IBM and Confluent collectively will allow enterprises to deploy generative and agentic AI higher and quicker,” Krishna mentioned. He added that the acquisition will permit IBM to supply an information platform constructed for enterprise IT groups working with AI.
How the deal got here collectively
Talks between the 2 corporations first occurred over the summer time, in keeping with a supply conversant in the discussions. They started with casual conversations tied to IBM’s companion community. After IBM expressed curiosity, Confluent introduced in advisers and opened a proper bidding course of. IBM finally secured the deal, the supply mentioned.
As a part of the settlement, Confluent CEO and co-founder Jay Kreps will be a part of IBM Software program and report back to Rob Thomas, an IBM spokesperson mentioned.
IBM labored with Centerview on the transaction, whereas Confluent employed Morgan Stanley. Cooley served as Confluent’s authorized adviser, and Paul Weiss suggested IBM.
IBM is providing $31 per share, a roughly 34% premium to Confluent’s prior shut. Confluent’s inventory jumped almost 30% after the information, whereas IBM shares rose barely. The inventory has climbed nearly 44% since Oct. 7, the final session earlier than Reuters reported that Confluent was exploring a sale.
“IBM is shopping for the important knowledge firehose that helps the AI hype,” mentioned Michael Ashley Schulman, chief funding officer at Working Level Capital. “With this buy, IBM improves … recurring income, tightening its grip on giant enterprises.”
IBM’s acquisition technique
IBM has relied on acquisitions for years so as to add scale and compete in cloud providers. It purchased HashiCorp in 2024 for $6.4 billion and purchased Purple Hat in 2019 for $34 billion, a deal that analysts say reshaped its cloud enterprise.
The corporate expects the Confluent buy to enhance adjusted core earnings within the first full 12 months after the deal closes. It additionally expects the deal to extend free money circulate by the second 12 months. Wedbush mentioned in a observe that the acquisition provides extra knowledge processing power to IBM’s hybrid cloud push and helps corporations break down knowledge silos for AI use. “We loudly applaud this deal as Arvind takes IBM additional into the AI Revolution with extra acquisitions doubtless forward,” the analysts wrote. The agency stored its obese ranking and $325 worth goal. IBM final closed at $307.94.
The addition of Confluent follows latest strikes to develop IBM’s software program base, together with the acquisition of HashiCorp final 12 months and Apptio the 12 months earlier than in a $4.6 billion deal. Each have been all-cash transactions.
Confluent has greater than 6,500 prospects in main industries, together with over 40% of Fortune 500 corporations. It additionally works with main cloud and AI suppliers resembling Anthropic, AWS, Google Cloud, Microsoft, and Snowflake. IBM mentioned this matches with its method of working throughout a large companion community.
Underneath the deal phrases, IBM will purchase all excellent Confluent shares for $31 every in money, valuing the corporate at $11 billion. IBM will use its out there money to fund the acquisition.
Each corporations’ boards have permitted the settlement. The deal nonetheless wants approval from Confluent shareholders and regulators. Confluent’s largest traders, who maintain about 62% of the corporate’s voting energy, have agreed to help the transaction. Additionally they agreed to not again different presents.
The businesses count on the deal to shut by mid-2026.
(Picture by Sam Pak)
See additionally: IBM extends serverless computing to GPU workloads for enterprise AI and simulation
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