IBM announced on Monday (8) that it will buy data infrastructure company Confluent, in a deal valued at US$11 billion, expanding its cloud computing offering to capitalize on the increase in demand driven by AI.
Big Blue, under the leadership of Chief Executive Arvind Krishna, has stepped up M&A operations to strengthen its cloud and software business – a high-growth, high-margin area – as customers invest in modernizing digital infrastructure to house complex AI applications.
Confluent, based in Mountain View, California, provides the technology needed to manage massive, real-time data streams for AI models.
“IBM and Confluent together will enable enterprises to implement generative, agent-driven AI better and faster,” Krishna said in a statement.
“With the acquisition of Confluent, IBM will provide the intelligent data platform for enterprise IT, purpose-built for AI,” he continued.
The offering price is US$31 per share.
Confluent shares have risen nearly 44% since Oct. 7, the last trading session before Reuters reported that the company was exploring a possible sale after attracting interest from buyers.
“IBM is buying the essential data stream that underpins the hype around AI,” highlighted Michael Ashley Schulman, chief investment officer at Running Point Capital.
“With this acquisition, IBM improves recurring revenue, consolidating its dominance over large companies,” he continued.
Series of acquisitions
IBM has long turned to mergers and acquisitions to gain scale and fend off competition, especially in cloud computing.
In April 2024, the company acquired cloud computing company HashiCorp in a deal valued at US$6.4 billion. The acquisition of Red Hat for US$34 billion in 2019 is considered by analysts as the main catalyst that boosted the cloud business.
IBM will finance the deal with Confluent with its own resources and the transaction is expected to be completed by mid-2026.
The deal is expected to boost IBM’s adjusted core earnings in the first full year after the transaction closes and contribute to free cash flow in the second year.
