IBM discusses buying Confluent for $11 bln. mid-cap company's shares soar 33%

Update: IBM has officially confirmed that it has agreed to buy Confluent in a deal worth $11 billion. That works out to $31 per Confluent share, a premium of nearly 34% to the closing price on December 5. At the pre-market on December 8, after the announcement of the deal, Confluent shares were up about 30%, while IBM shares were down 1%.

Technology giant IBM is close to buying data infrastructure company Confluent, The Wall Street Journal reported, citing sources. According to them, the discussed amount of the deal is about $11 billion. The agreement may be announced as early as December 8, but there is a possibility that the negotiations may still break down, the sources said.

Confluent's shares jumped by 33% on the premarket on December 8: the price reached about $30.81. At the main trades the company's shares have not cost so much since March. Compared to the beginning of 2025, the stock is 17% cheaper (excluding the premarket surge on Monday).

IBM shares were down 0.3% at the premarket on Dec. 8. At the beginning of the year, they added 40%, significantly outperforming the Nasdaq Composite index of technology companies, which rose by almost 22%.

Confluent's market capitalization at the close of trading on Dec. 5 was about $8 billion, while IBM's was about $290 billion. Neither IBM nor Confluent responded to Reuters' request for comment.

Confluent provides technologies that help in real-time management of data streams used in large-scale artificial intelligence models. The AI boom has increased demand for these capabilities from companies in the retail, technology and financial services industries.

The purchase of Confluent could be IBM's biggest deal in recent years and part of its strategy to reshape its business around artificial intelligence, the WSJ writes. Investors have become more cautious after IBM reported slower growth in its key cloud software business in October, raising concerns about the company's ability to maintain momentum, Reuters notes. Analysts noted that IBM would need stronger momentum in its software segment to sustain overall growth, the agency added.

In 2024, IBM agreed to acquire cloud software developer HashiCorp for $6.4 billion, accelerating its push into the fast-growing cloud and AI segments, the WSJ writes.

IBM is competing with Google, Microsoft and a number of startups to create computers that exceed the capabilities of currently common systems. In particular, IBM is developing large clusters of quantum chips.

Analysts mostly advise "buy" on Confluent's stock: it has 19 Buy ratings and five Overweight ratings versus nine Hold (a "hold" recommendation) and one Underweight ("below market," consistent with a "sell"), MarketWatch shows.

IBM shares in total have even fewer ratings than Confluent securities, and the attitude towards them is less positive. The most popular recommendation is also "buy" (nine Buy and two Overweight), but seven analysts advise "hold", four - "sell" (one Underweight and three Sell), follows from the data of MarketWatch.

This article was AI-translated and verified by a human editor