Manufacturers such as Michelin, for example, have used Confluent’s platform to optimize their inventories of raw and semi-finished materials live. Instacart adopted Confluent to develop real-time fraud detection systems and gain more visibility into the availability of products sold on its grocery delivery platform. Businesses are increasingly tapping AI systems that manage tasks like this in real-time and require live flows of data to do so.
IBM, which pioneered mainframe computers, has been trying to reposition its business around AI over the past few years. Under Chief Executive Officer Arvind Krishna, it’s been buying software companies and selling generative AI-related services to enterprise clients. Software now makes up almost half its total revenue and continues to grow at a steady rate. The Confluent acquisition would be IBM’s biggest since it bought cloud software firm Red Hat for about $34 billion in 2019.
Confluent’s takeover stands apart from the multibillion-dollar deals that have dominated the AI space in recent months, largely focused on data centers and the computing power necessary to build and power AI systems themselves. Soaring demand for such capacity has fueled massive transactions, including BlackRock Inc.’s $40 billion purchase of Aligned Data Centers and Oracle Corp.’s agreement to supply OpenAI with about 4.5 gigawatts of computing power, worth as much as $300 billion.
Confluent was started in 2014 by a trio of founders who came from LinkedIn, including the company’s current chief executive officer, Jay Kreps. The firm’s shares had fallen 17% this year before news of the deal. The stock is far below its intraday peak of $94.97 a share in November 2021, following the company’s initial public offering.
Barclays Plc, Centerview Partners LLC and JPMorgan Chase & Co. advised IBM, while Morgan Stanley advised Confluent, according to people familiar with the matter who asked not to be named because the matter is private. The banks each declined to comment.
The acquisition builds on a five-year partnership between the two firms, which allowed some IBM customers to use Confluent’s data-streaming platform.
IBM completed its $6.4 billion purchase of HashiCorp Inc. in February and recently considered buying Informatica Inc., another infrastructure-focused vendor that was ultimately acquired by Salesforce Inc.
