IBM has signed a definitive agreement to acquire DemandTec in a $440 million deal to bolster the IBM Smarter Commerce strategy with DemandTec's cloud-based analytics software.
a definitive agreement to acquire DemandTec
a maker of cloud-based marketing and sales software, for $440 million.
said the acquisition of DemandTec will extend IBM's Smarter Commerce
initiative by adding cloud-based
price, promotion, and other merchandising and marketing analytics to help companies
better define the best price points and product mix based on customers' buying
trends. The deal, announced Dec. 8, is expected to close in the first quarter
Commerce is redefining how brands buy, market, sell [to] and service their customers
in ways that their customers want," Craig Hayman, general manager of Industry
Solutions at IBM, said in a statement. "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 they believe companies are struggling to meet the demands of customers' rapidly
shifting buying patterns in the era of mobile and social networks. This new
digital marketplace requires companies to be highly responsive to consumer
demands on the fly. Whether it's setting and executing the right pricing
strategy or the ability to automatically adjust pricing based on online and offline
data, being able to rapidly shift to market changes has become a key
competitive advantage for global businesses, IBM said.
the market opportunity for Smarter Commerce at $20 billion in software alone.
Extending these capabilities to the cloud gives organizations immediate access
to consumer information, potentially providing instant return on investment.
produces cloud-based analytics software that enables businesses to examine customers'
different buying scenarios, both online and in-store. As a result, companies
can spot trends and shopper insights to make better price, promotion, and
assortment decisions that increase revenue and profitability.
unprecedented capability to improve customers' price and promotion tactics on a
standalone basis and connect retailers and manufacturers for collaborative planning
through the cloud," Dan Fishback, president and CEO of DemandTec, said in a
statement. "IBM Smarter Commerce is the perfect fit for DemandTec. IBM is the
only provider of price and promotion offerings within a rich solution set that
supports companies' buy, market, sell and service processes."
"We view this
deal as consistent with IBM's focus on value-added data analytics (also seen in
past acquisitions such as Q1 Labs, i2, Netezza, etc.)," Brian Marshall, an IT
hardware analyst with International Strategy and Investment Group (ISI Group), said
in a notice on the acquisition. "We would expect that IBM's broad channel and
global customer footprint will help accelerate growth and make the deal
accretive (i.e., "Sam wants his money back..."). As online and mobile
commerce grow rapidly, we think this software asset will prove very strategic
to IBM in helping customers identify and benefit from shopping trends."
its Smarter Commerce strategy in March 2011 and claims leadership in several of
the various categories that make up Smarter Commerce. The acquisition of
DemandTec will extend this leadership by enabling companies to use cloud
computing services to gain insights about customer merchandising and pricing
preferences to better market, sell and deliver the right product at the right
place, and at the right price. DemandTec also expands IBM's software-as-a-service
strategy by adding additional, subscription-based offerings to IBM's SaaS
approximately 450 customers worldwide in retail, consumer products and other
industries. Retail industry segments served include grocery, drug, convenience,
consumer electronics, office supplies, apparel, department stores and
quick-serve restaurants. Manufacturer segments include fast-moving consumer
goods categories, such as food, beverage, and health and beauty. DemandTec also
has a portfolio of 31 patents in the areas of pricing, response analysis and
consistent with IBM's Smarter Commerce strategy, the company will continue to
support and enhance DemandTec's technologies and clients while allowing them to
take advantage of the broader IBM portfolio. DemandTec will be integrated into
IBM's Software Group, which is a key driver of growth and profitability for
based in San Mateo, Calif., and has more than 350 employees, with additional
offices in Minneapolis, London, Paris and Bangalore. The acquisition is subject
to DemandTec shareholder approval, applicable regulatory clearances and other
customary closing conditions.