IBM Poised to Acquire Confluent for Less Than Its IPO Price

IBM nears $11 billion deal for Confluent, igniting after-hours surge in software stocks

Confluent shares leapt in after-hours trading after a Wall Street Journal report said IBM is close to acquiring the real-time data streaming company in a deal valued near $11 billion, signaling fresh momentum in big-cap tech M&A and a potential boost to risk appetite across growth stocks.

Market snapshot and pricing

Confluent (CFLT) closed Friday at $23.14, giving the company an $8 billion market capitalization. An $11 billion transaction would imply an equity value near $31.70 per share—a roughly 37% premium to the last close. After-hours trading quickly repriced that gap, with the stock changing hands around $28.60, up about 22%. The WSJ said a deal could be announced as soon as Monday, while cautioning talks could still fall apart.

An important valuation wrinkle: Confluent has roughly $800 million in net cash. Depending on whether the reported figure reflects enterprise value or equity value, the ultimate per-share consideration could differ from the back-of-the-envelope premium implied by headline numbers.

Key Points

• IBM is reported to be near an approximately $11 billion acquisition of Confluent.
• Implied takeout price suggests about $31.70 per share, a ~37% premium to Friday’s close.
• Confluent shares jumped roughly 22% after hours to around $28.60.
• Confluent has posted about $1 billion in revenue over the past four quarters but remains GAAP unprofitable.
• A deal announcement could come as early as Monday, though talks may still fail to conclude.

Strategic logic and sector read-through

Confluent provides real-time data infrastructure, enabling event-driven applications to share and process data instantly across systems—technology widely used for payments, inventory, and customer analytics. For IBM, adding a modern data streaming layer could deepen its hybrid cloud and AI stack, complementing integration and observability tools and potentially enhancing cross-sell into enterprise clients.

Traders will watch for sympathy moves in adjacent data infrastructure names and observability/software peers as the prospect of a sizeable premium deal can buoy sentiment. A renewed takeover bid in high-multiple software often lifts broader growth cohorts, especially in thinner liquidity conditions.

Valuation context for CFLT holders

Even with a premium, a takeout would mark a downbeat end for Confluent’s once high-flying IPO arc. The stock priced at $36 in 2021 and peaked near $95 in the months after listing; it traded above $30 as recently as February. Persistent GAAP losses despite roughly $1 billion in trailing revenue underscore the profitability challenges that public software platforms face in a higher-rate environment.

Macro and risk sentiment

Large-cap tech M&A tends to support risk appetite, potentially aiding Nasdaq-linked sentiment at the margin. Still, the durability of any rally across software depends on the rate path: elevated real yields typically compress growth multiples, while a softer dollar and lower yields can widen risk tolerance. If the deal proceeds, it would add to 2024–2025’s drumbeat of strategic acquisitions, a constructive signal for equity liquidity and corporate confidence.

What’s next

Deal timing, structure (cash vs. stock), and whether the $11 billion headline reflects enterprise value or equity value will be crucial for pinning down per-share consideration. Regulatory scrutiny for vertical integration in data infrastructure bears watching, though Confluent’s footprint is not dominant in the same way as hyperscale platforms.

FAQ

What exactly did the report say?
The Wall Street Journal reported IBM is near an acquisition of Confluent valued around $11 billion and that a deal could be announced as soon as Monday, while warning talks might still fall apart.

How much is the implied takeover premium?
Based on Friday’s close of $23.14 and an $11 billion headline value, the back-of-the-envelope equity value suggests roughly $31.70 per share—about a 37% premium. After-hours trading moved toward that range.

Does Confluent’s cash position affect the offer price?
Yes. If the reported $11 billion reflects enterprise value, Confluent’s approximately $800 million net cash would imply a higher equity value. If it reflects equity value, the per-share consideration would align closer to the $31.70 estimate. Deal documents will clarify.

Why might IBM want Confluent?
Confluent’s real-time data streaming is a backbone for event-driven applications. It complements IBM’s hybrid cloud, integration, and AI offerings, potentially accelerating data observability and real-time analytics for enterprise clients.

What are the risks to closing?
Negotiations can fall apart due to price, terms, or regulatory concerns. While data infrastructure faces less antitrust heat than hyperscale platforms, regulators still scrutinize large tech transactions.

How could this affect broader markets?
A premium tech deal can buoy sentiment in software and growth equities. In FX and macro, the broader impact hinges on yields and the dollar—lower real yields typically support high-multiple tech, while a firmer dollar and higher yields can cap rallies.

Is this positive for IBM shareholders?
Strategically, it could strengthen IBM’s data and AI stack. Financially, investors will assess dilution or leverage, integration execution, and the timeline to profitability given Confluent’s GAAP losses. The market’s initial reaction will depend on final terms and synergy guidance.

This article was produced by BPayNews.