IBM set to buy Confluent for $11 bn to strengthen hybrid cloud, AI strategy

To advance its capabilities in the AI age, International Business Machines (IBM) is all set to acquire Nasdaq-listed Confluent for $11 billion in an all-cash deal. This will mark IBM’s second-biggest buy after Red Hat, which it acquired in 2019 for $34 billion. The transaction is expected to close by the middle of 2026. Through this acquisition, IBM hopes to up its AI game,  leveraging Confluent’s platform for faster and reliable deployment of generative and agentic AI across industries.  

In an update call, Arvind Krishna, IBM’s Chairman, President & CEO, said the acquisition would help the company to deliver a modern, open, smart data platform for generative AI that enables integration of applications, AI agents and data systems, driving intelligence and resilience in hybrid cloud environments. “Together with IBM, Confluent helps unify our hybrid parts solutions by creating a smart data platform connecting our Red Hat and automation products with our hybrid deployment approach to AI, including Red Hat OpenShift, WatsonX and Orchestrate,” he said. 

Further, IBM hopes to expand its market reach with Confluent in a rapidly growing real-time data streaming and event processing market, estimated to be around a 100 billion-dollar-plus opportunity. The Big Blue sees significant synergies coming from the deal, especially in its product portfolio - including AI products and services, Automation, Data and Consulting. On the timing of the deal, IBM sees the acquisition plugging a critical gap, at a time when enterprises are modernising and looking to build next-generation applications using generative AI at enterprise scale. “Today, it (data) is spread across public and private clouds, on-premises and countless other technology providers. Confluent’s leading data streaming platform, combined with IBM’s trusted data architecture, deep AI expertise, innovation track record and operating discipline, will help enterprises unlock the value of AI with the greatest speed, reliability and efficiency together,” Krishna added.  

The deal is also expected to not just bring in more revenue, given Confluent’s nearly $1billion annual revenue run rate, but it will be accretive to adjusted EBITDA within the first full year and free cash flow in year two. Headquartered in Mountain View, California, Confluent has more than 6,500 clients across major industries, with nearly 40% of them being Fortune 500 companies.