Shareholders of Confluent ($CFLT) might be about to have a great start to the week, though it's a sad end or the highly-touted IPO.
The WSJ reports that IBM is near an $11 billion deal to buy the company. On Friday, shares closed at $23.14 with a market cap of $8 billion. That would imply a 37% premium or $31.70 per share.
Shares are currently trading $28.60 after hours, up about 22%. It's not clear if the deal accounts for the $800m in net cash on Confluent's balance sheet so the ultimate per-share value could be lower to account for that.
"A deal could be announced as soon as Monday, the people said, cautioning that the talks could still fall apart," the WSJ writes.
However, given the tone of this report, I'd wager a very high chance of a deal.
For the bigger picture, Confluent acts as a central nervous system for companies, allowing their different software and apps to share data instantly as events happen. Instead of waiting for daily reports or overnight updates, Confluent connects everything in real-time—so when you buy a plane ticket, your bank, the airline app, and the ticket inventory update simultaneously and the banking software can communicate.
Despite the win on Monday, this is a long-term loser for shares of CFLT. The IPO price was $36 in 2021 and rose as high as $94.97 in the following months. It traded above $30 as recently as February.
Over the past four quarters, the company has posted about $1 billion in revenue but also a GAAP loss, and I'm not sure shareholders of IBM will like that.
