IBM to Acquire DemandTec for $440 Million; Taking Smarter Commerce to the Cloud
On Thursday, IBM (NYSE:IBM) announced that it has entered into a definitive merger agreement to acquire DemandTec – a cloud-based analytics software provider – in an all cash transaction at $13.40 a share or approximately $440 million, after adjusting for cash. Upon closing of acquisition, which is expected to happen in first quarter of 2012, DemandTec will become part of IBM’s software group and will extend the firm’s Smarter Commerce initiative. [1]
We currently have a $187 Trefis price estimate for IBM.
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Smarter Commerce a Big Opportunity
With the customer buying patterns shifting rapidly in the era of mobile and social networks, IBM sees a big opportunity in helping companies to be highly responsive to consumer demands on the fly – something organizations are struggling to do at the moment. In fact, IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone. With DemandTech acquisition, IBM is extending its Smarter Commerce capabilities to the cloud to provide clients immediate access to consumer information and thus instant return on investment
Why DemandTec?
DemandTec’s cloud-based analytics software enables businesses to examine different customer buying scenarios, both online and in-store, which helps them to spot trends and shopper insights. Based on the trends and insights, businesses can make better price, promotion, and assortment decisions that will result in increased revenue and profitability.
DemandTec has approximately 450 customers worldwide in retail, consumer products and other industries. It also has a portfolio of 31 patents in the areas of pricing, response analysis, and promotion analysis.
IBM has been launching a myriad of solutions and services under its Smarter Planet initiative lately. Earlier in November, IBM launched its Smarter Checkout solution to provide real time data at point of sale. More recently on Monday, IBM announced the acquisition of Dublin-based Cúram Software to boost its Smarter Cities initiative.
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