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IBM (s ibm) plans to acquire retail data analytics company DemandTec in an all-cash deal valued at $440 million, continuing Big Blue’s buys in big data businesses. DemandTec (s dman) has two especially compelling elements for IBM: It will add to its big data expertise, and it’s vertically focused in the retail market.
The dedicated focus should put IBM up against Oracle (s orcl) and SAP, both of which have strong retail software businesses thanks to their own acquisitions. However, DemandTec is an interesting company in its own right, with 450 customers that range from Target Corp. (s tgt) to Unilever. (s ul) The company helps retailers and consumer product companies set prices based on customer buying history as well as the current contents of their shopping baskets. This real-time analysis of customer buying habits and current inventory is what DemandTec is offering certain clients today, but it also has an eye on folding in unstructured data associated with people’s Twitter streams and Facebook pages.
When I spoke with the company 18 months ago, the plan was for DemandTec to spend its research dollars looking for ways to incorporate unstructured social data into its price-setting algorithms. At that point perhaps people end up paying more for hot products or customers might get discounts associated with their loyalty to a store not only by shopping there, but by mentioning it favorably.
IBM plans to incorporate the DemandTec acquisition into its Smarter Commerce initiative, which it believes is a $20 billion market. The acquisition, which involves IBM offering $13.20 per share for DemandTec — a 60-percent premium over Wednesday’s closing price — is expected to close in the first quarter of 2012 pending shareholder approval.
It’s possible that IBM’s knowledge of DemandTec came from its acquisition last year of Netezza, a data warehousing provider that counted DemandTec as a client.