IBM Offers $440 Million for DemandTec, Cloud-based Analytics Software Company

Vendor seeks to expand its portfolio of Smarter Commerce offerings. Acquisition will be folded into IBM’s software unit.

January 4, 2012

D.H. Kass

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IBM Corp. said that it will plunk down $440 million, or $13.20 a share, for DemandTec Inc., a publicly-held San Mateo, CA-based maker of cloud-based analytics software that examines and assesses customer buying trends, an acquisition the vendor said will broaden its Smarter Commerce offerings.

The transaction, which is expected to close before March, 2012, is subject to shareholder approval and regulatory clearances, the companies said. The per share price amounted to a 57 percent premium over DemandTec’s closing price the day prior to IBM’s offer, and the stock subsequently has traded near the purchase price.

DemandTec, which was founded in 1999 and became publicly-traded in 2007, generated $82.4 million in sales in fiscal year 2012, ended February 28, 2011. The company employs some 355 people and sells its wares to about 450 customers worldwide in retail and consumer products. It customers include Ahold USA, Best Buy, ConAgra Foods, Delhaize America, General Mills, H-E-B Grocery Co., The Home Depot, Monoprix, PETCO, Safeway, Sara Lee, Target, Walmart, and WH Smith.

IBM said that its interest in DemandTec stems from the company’s cloud-based price, promotion, merchandising and marketing analytics technology which the vendor believes it can leverage to advance its Smarter Commerce initiative.

By adding cloud-based technology to help customers more readily adjust to rapid changes in the marketplace, IBM contends it can carve out a stronger position in a market it pegs at $20 billion for analytics software.

“Bringing science to the art of pricing and promotion is a big part of this strategy, and the combination of DemandTec and IBM will help marketing and sales executives in retail and other industries drive more revenue and increase profitability,” said Craig Hayman, IBM general manager, Industry Solutions.  

Dan Fishback, DemandTec president and chief executive, said that the vendor’s cloud technology enables retailers and manufacturers to engage in “collaborative planning” and improve its clients pricing and promotion strategies and tactics.

“IBM Smarter Commerce is the perfect fit for DemandTec,” he said. “IBM is the only provider of price and promotion offerings within a rich solution set that supports companies’ buy, market, sell and service processes.”

IBM said that the DemandTec acquisition also will expand its software-as-a-service (SaaS) portfolio by adding that company’s subscription-based solutions. The vendor said that it will continue to support DemandTec’s technologies and clients and allow the company to leverage its portfolio of goods and services.

IBM initiated its Smarter Commerce platform in March, 2011 and subsequently has built out the practice with earlier purchases of Sterling Commerce, Coremetrics and Unica.

TAGS: cloud computing,IBM,acquisition,analytics,smarter commerce,DemandTec

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