IBM Corp has validated a definitive plan for a $440 million takeover of DemandTec Inc, which will add online trend-based business tools to its services. The two companies agreed a cash buyout price of $13.20 per share, which is about 57% higher than California-based DemandTec’s closing price the day before the announcement.
The deal is expected to be concluded in the first quarter of 2012.
DemandTec is an expert in cloud-based business solutions that allow companies to analyze online and in-store buying patterns. Its price and promotion analytics software will expand IBM’s Smarter Commerce initiative, allowing it to help businesses identify trends early to appropriately adjust its prices and products.
Sights Set On The Cloud
The world’s largest computer services provider announced last year a $20 billion budget for mergers and acquisitions through 2015 as it looks to expand its cloud-based analytics offer. The latest acquisition is the biggest in over a year following the $1.7 billion takeover of data analytics company Netezza in September 2010.
Mark Moskowitz, an analyst at financial services firm JP Morgan & Chase, said IBM has been doing its M&A homework. “DemandTec assets could be a good fit… [this] is another example of IBM finding quality assets,” Moskowitz said in a note to investors.
The age of social networking and online and mobile shopping has made it more challenging for companies to follow buying patterns. The digital marketplace is constantly shifting and evolving and businesses are forever trying to anticipate trends to be able to respond quickly to customer demand.
IBM estimates put the global Smarter Commerce market at around $20 billion in software alone. Implementing cloud-based solutions gives companies instant access to consumer trends and allows for immediate return on investment.
In 2010, IBM spent a total of $2.5 billion for the acquisition of three electronic commerce companies: Sterling Commerce, Unica Corp and Coremetrics.
Key Statistics – Cloud Computing
- The global cloud computing market is projected to grow from $40.7 billion to $241billion between 2011 and 2020 (source: Forrester Research).
- The global Cloud Computing services market is expected to reach a value of $127 billion by end 2017 (source: Global Industry Analysts).
- The Asia-Pacific region is among the fastest growing markets for cloud computing services, with revenue predicted to grow at an annual rate of 35% through 2017 (source: Global Industry Analysts).