IBM pays $440M for cloud analytics software maker

Purchase will add cloud-based price, promotion and other merchandising and marketing analytics result to IBM’s Smarter Commerce initiative.

IBM Corp. is expanding its cloud offerings with the acquisition of DemandTec, a provider of cloud-based analytics software.

The all-cash transaction calls for IBM to pay $13.20 per share, for a net price of approximately $440 million for the San Mateo, Calif., company.

DemandTec delivers cloud-based analytics software that enables businesses to examine different customer buying scenarios, both online and in-store.

The acquisition 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 a Dec. 9 IBM announcement.

IBM estimates the market opportunity for Smarter Commerce at $20 billion in software alone, the announcement added.

DemandTec will be integrated into IBM's Software Group, which is a key driver of company growth and profitability.

The purchase is IBM’s biggest since the takeover of analytics-technology provider Netezza Corp. last year for about $1.7 billion, according to Bloomberg News.

“DemandTec assets could be a good fit,” JPMorgan & Chase analyst Mark Moskowitz said in a note to clients today, according to Bloomberg. “DemandTec is another example of IBM finding quality assets," he said.

DemandTec has approximately 450 customers worldwide and 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. It’s expected to close in the first quarter of 2012.

IBM, of Armonk, N.Y., ranks No. 21 on Washington Technology’s 2011 Top 100 list of the largest federal government contractors.