IBM Corp. said today it has signed a definitive agreement to acquire streaming data firm Confluent Inc. in an all-cash transaction valued at about $11 billion, paying $31 per share in cash for all outstanding Confluent common stock.

Confluent sells an enterprise version of the open-source Kafka data streaming platform, which it said is used by 80% of the Fortune 100. IBM said the addition of Confluent underlines a broader IBM push to build a unified “smart data platform” for enterprises deploying generative and agentic artificial intelligence.

Executives from both companies said that the merger is rooted in the growing demand for trusted, real-time data in complex hybrid-cloud environments. “It extends our ability to help clients move from insight to action instantly across complex hybrid environments,” wrote IBM Chief Executive Arvind Krishna in a LinkedIn post. “We use both organic growth and targeted M&A to strengthen the platforms our clients rely on most – hybrid cloud, automation, integration, security, and AI.” Confluent co-founder and CEO Jay Kreps (pictured) said joining IBM is an opportunity to accelerate Confluent’s strategy globally.

The two companies have had a resale agreement for seven years. Confluent has recently “been taking market share from IBM and IBM’s own Kafka offerings have not had the same success as products like IBM MQ,” said Gartner Inc. Senior Director Analyst Andrew Humphreys, referring to IBM’s messaging middleware. “The acquisition also strengthens IBM’s ability to combine Kafka with other offers in its own portfolio, which would be harder to achieve through a traditional partnership.”

Analysts said the acquisition aligns with IBM’s recent pattern of strategic deals to expand its footprint in cloud infrastructure and AI, beginning with the 2019 purchase of Red Hat Inc. and continuing, more recently, with the 2024 acquisition of infrastructure automation specialist HashiCorp Inc.

While an acknowledged leader in streaming data, Confluent has struggled recently, posting disappointing results in its fiscal second quarter and lowering its outlook. Reuters reported in October that the company was exploring a sale.

The deal comes as tech giants such as Salesforce Inc. and Oracle Corp. are paying more attention to governance to support AI training and inference. “This enables IBM to compete more effectively against Salesforce, Oracle and others as the platform to control and access data and feed AI,” said Gartner’s Humphreys. “IBM has not been hugely successful with its own Kafka and data streaming products so I think this addresses those gaps.”

IBM said it expects the all-cash deal to be accretive to adjusted earnings before interest, taxes, depreciation and amortization in the first full year after the expected closing in mid-2026 and to generate positive free cash flow by the second year. The purchase price is a 34% premium to Confluent’s $23.14 closing price Friday.

The deal appears to be intended to anchor IBM’s AI stack in the foundational layer of data-in-motion. Confluent’s streaming and event-data infrastructure is seen as critical to supporting enterprise-scale AI deployments as companies increasingly incorporate real-time data pipelines to feed analytics, automation and generative-AI systems.

The acquisition will also give IBM access to Confluent’s 6,500 customers and expand its reach into existing enterprise data architectures as it sells its combined AI, data and cloud products.

Photo: Confluent