IBM to Acquire DemandTec to Expand Cloud-Based Analytics for Smarter Commerce

IBM and DemandTec have entered into a definitive merger agreement for IBM to acquire DemandTec in an all cash transaction for approximately $440 million. DemandTec delivers cloud-based analytics software that enables businesses to examine different customer buying scenarios, both online and in-store, so they can spot trends and shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.  

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 customer buying trends.  

According to IBM, organizations are struggling to meet the demands of rapidly shifting customer buying patterns in the era of mobile and social networks, and the new digital marketplace requires companies to be more responsive to consumer demands on the fly. Being able to rapidly shift to market changes has become a key competitive advantage for global businesses, IBM says, whether that is setting and executing the right pricing strategy or the ability to automatically adjust pricing based on online and offline data. IBM estimates 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, providing instant return on investment. 

By gaining a quick and accurate analysis of consumer trends, for example, IBM says, a retailer can predict how consumers will respond to a price change before making that critical decision; a brand manager can adjust the marketing mix for a product to better drive sales in the grocery channel; and a merchant and supplier can work together to understand how one shopper segment differs from another to craft the best merchandising plan.

DemandTec has 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 promotion analysis.

Based in San Mateo, Calif., DemandTec has more than 350 employees, with additional offices in Minneapolis, London, Paris, and Bangalore. It will be will be integrated into IBM's Software Group.

The acquisition is subject to DemandTec shareholder approval, applicable regulatory clearances and other customary closing conditions, and is expected to close in the first quarter of 2012.