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International Business Machines Corp. (IBM) on Monday announced one of its largest acquisitions ever, agreeing to buy data-streaming platform Confluent Inc. for $11 billion including debt. The deal represents a major bet on enterprise software needed to power real-time artificial intelligence (AI) tools and applications.
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Under the terms announced Monday, IBM will pay $31 per share in cash for all outstanding Conflunent stock, valuing the company an approximately $109 billion on an equity basis. Confluent shares surged 29% to $29.97 at Monday's close, more than a dollar below the offer price, while IBM stock rose as much as 2.4% and finished 0.4% higher.
The acquisition would be IBM's biggest since its $34 billion purchase of Red Hat in 2019. The transaction, which builds on a five-year partnership between the two companies, is expected to close by mid-2026 and requires Confluent shareholder approval and regulatory clearance.
The deal underscores the growing importance of real-time data infrastructure as businesses increasingly deploy AI systems that require live data flows to manage tasks instantly. IDC estimates more than one billion new logical applications will emerge by 2028, reshaping technology architectures across industries.
Real-Time Data for AI Agents
Confluent's platform enables companies to gather and analyze data in real time rather than in batches, a capability that has become critical as enterprises adopt AI agents requiring instant data access. The Mountain View, California-based company serves more than 6,500 clients across major industries, with over 40% of Fortune 500 companies among its customers.
"Data, and especially real-time data, is incredibly important to how an enterprise functions," IBM CEO Arvind Krishna told CNBC Monday. "Nobody can live with month-old data, or even week-old data, and Confluent has the most capable technology to unlock the real-time value of data."
Manufacturers such as Michelin have used Confluent's platform to optimize inventories in real time, while Instacart adopted it for fraud detection systems. Confluent excels at keeping data clean and connected across systems and applications, eliminating silos inherent in AI agent deployments.
Strategic Fit in IBM's AI Push
The acquisition aligns with IBM's strategy to reposition around AI under Krishna's leadership. Software now accounts for almost half of IBM's total revenue and continues growing steadily. Confluent will become part of IBM's software unit, complementing its Data and Automation portfolio.
"The acquisition of Confluent is expected to drive substantial product synergies across IBM's portfolio—including AI products and services, Automation, Data and Consulting—and accelerate revenue growth by leveraging IBM's go-to-market reach," the companies said in a statement.
Bloomberg Intelligence analysts Anurag Rana and Andrew Girard noted the deal "could significantly improve IBM's AI portfolio, and subsequently its software unit's sales growth." Wedbush called it a "strong move" that adds more data processing capabilities to IBM's hybrid cloud ecosystem.
IBM said it expects the transaction to be accretive to adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, within the first full year and to free cash flow in year two post-close. Confluent's total addressable market has doubled from $50 billion to $100 billion over the past four years.
Deal Details and Recent M&A Activity
Confluent's largest shareholders and investors, holding approximately 62% of voting power, have agreed to vote in favor of the transaction. If the deal fails or is terminated, IBM will pay a breakup fee of $453.6 million, according to regulatory filings.
The acquisition continues IBM's recent buying spree. The company completed its $6.4 billion purchase of HashiCorp Inc. in February and previously acquired Apptio for $4.6 billion in 2023. Both deals were all-cash transactions. IBM had also recently considered buying Informatica Inc., another infrastructure-focused vendor ultimately acquired by Salesforce Inc.
Confluent was founded in 2014 by a trio from LinkedIn, including current CEO Jay Kreps. Its shares had fallen 17% this year before news of the deal and remain far below their November 2021 peak of $94.97 following the company's initial public offering.
Barclays Plc, Centerview Partners LLC and JPMorgan Chase & Co. advised IBM, while Morgan Stanley advised Confluent, according to people familiar with the matter.
The AI boom has driven technology M&A to record levels, with deal values hitting $1 trillion for the first time in a calendar year, according to data compiled by Bloomberg. Recent AI-related transactions have largely focused on datacenters and computing power, including BlackRock Inc.'s $40 billion purchase of Aligned Data Centers.
