IBM announced a definitive agreement to acquire DemandTec, for $440 million. DemandTec 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.

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.

IBM executives 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 Q1 2012.

IBM estimates the market opportunity for its Smarter Commerce strategy 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. IBM launched 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 subscription-based offerings to IBM's SaaS solutions portfolio.

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

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