International Business Machines Corp. (IBM), the biggest computer services provider, agreed to buy DemandTec Inc. (DMAN) for $440 million, adding Internet-based tools to help businesses adjust promotions based on buying patterns.
The all-cash transaction amounts to $13.20 a share, and is expected to close in the first quarter of 2012, Armonk, New York-based IBM said today in a statement. That’s 57 percent higher than DemandTec’s closing price yesterday. IBM said last year it plans to spend about $20 billion on acquisitions through 2015, as it expands offerings to business customers.
The purchase is IBM’s biggest since the takeover of analytics-technology provider Netezza Corp. last year for about $1.7 billion. DemandTec will extend IBM’s Smarter Commerce initiative, allowing companies to quickly adjust prices, promotions and other marketing efforts by analyzing online and in-store buying trends.
“DemandTec assets could be a good fit,” Mark Moskowitz, an analyst at JPMorgan & Chase Co. with an “overweight” rating on IBM shares, said in a note to clients today. “DemandTec is another example of IBM finding quality assets.”
IBM fell 1.3 percent to $191.58 at the close in New York. DemandTec jumped 56 percent to $13.15.
IBM is paying a premium of 72 percent compared with the 20- day trading average price before the announcement. The average premium of 52 acquisitions of decision-support software companies in the U.S. was 45 percent in the past five years.
DemandTec, based in San Mateo, California, employs more than 350 people and has about 450 customers worldwide, including Best Buy Co., ConAgra Foods Inc. and Target Corp.
The overall market for Smarter Commerce software is worth $20 billion, IBM estimates. The company spent $2.5 billion on three Internet commerce acquisitions last year, buying Sterling Commerce, Coremetrics Inc. and Unica Corp.