IBM buys retail analytics vendor DemandTec for $440m

IT giant IBM has announced its intention to buy US retail analytics software provider DemandTec for $440 million.

DemandTec is a cloud-based analytics provider, which helps retailers examine their customers’ buying habits in order to set prices and organise promotions.

IBM general manager Craig Hayman said that the acquisition would extend its focus on commerce, bringing “science to the art of pricing and promotion. The combination of DemandTec and IBM will help marketing and sales executives in retail and other industries drive more revenue and increase profitability.”

Like many software-as-a-service providers, DemandTec has struggled to turn a profit. In fact, it has made a loss in every single financial quarter since its initial public offering in 2007.

The company’s share price hit a peak of around $20 shortly after the IPO, but in August it was as low as $5. The price IBM has agreed to pay represents a 57% premium over its market capitalisation before the deal was announced.

The deal is the latest in a long run of acquisitions by IBM in the analytics space. Earlier this year, it bought risk analytics software company Algorithmics for $387 million, and paid an undisclosed amount for i2, a UK company whose technology helps helps businesses and public authorities detect crime and fraud.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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