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IBM buys Silicon Valley cloud company for $440 million [San Jose Mercury News, Calif.](San Jose Mercury News (CA) Via Acquire Media NewsEdge) Dec. 08--As large software companies continue to look for entries into the cloud, Silicon Valley is cashing in; on Thursday, San Mateo-based cloud software company DemandTec was the latest to be acquired, as IBM agreed to pay about $440 million for the company. IBM will pay $13.20 cents a share for DemandTec, a 57 percent premium over the company's share price of $8.43 at Tuesday's close, the companies announced Thursday. DemandTec offers cloud-based analytics research to companies, who use the research to determine trends in shoppers' habits, allowing them to better set prices, make purchasing decisions and decide on promotions. "DemandTec has unprecedented capability to improve customers' price and promotion tactics on a stand-alone basis and connect retailers and manufacturers for collaborative planning through the cloud," said Dan Fishback, president and CEO of DemandTec, said in the news release. DemandTec's 350 employees will be integrated into IBM's software division, where it will focus on the New York-based company's Smarter Commerce initiative, which was launched in March and seeks to help companies make better decisions in the areas DemandTec in which specializes. "Bringing science to the art of pricing and promotion is a big part of this strategy, and the combination of DemandTec and IBM will help marketing and sales executives in retail and other industries drive more revenue and increase profitability," Craig Hayman, general manager of industry solutions at IBM, said in the announcement. Fellow San Mateo-based cloud software company SuccessFactors was purchased by German tech giant and Oracle (ORCL) rival SAP on Saturday for $3.4 billion, a 52 percent premium on that company's stock price. Oracle had already made an acquisition aimed at a greater presence in cloud software offers, purchasing RightNow Technologies for $1.4 billion in October. After the SAP deal for SuccessFactors, analysts expected further acquisitions of cloud-computing companies by big software firms. "We expect this M&A trend to continue as it reflects the competitive pressure traditional software vendors are feeling from software-as-a-service companies and the margin pressures software-as-a-service companies face as they attempt to rapidly scale their distribution," JMP Securities analyst Patrick Walravens said in a note, according to MarketWatch. San Mateo has been the home of three big acquisitions in less than a week. Besides DemandTec and SuccessFactors, electrical-utility software company eMeter was purchased by the German company Siemens for an undisclosed price. DemandTec brings 450 customers and 31 patents to IBM, and also has offices in Minneapolis, London, Paris and Bangalore. IBM expects the deal to close in early 2012. IBM stock fell in early trading after the deal was announced; shares were selling for $193.12 at 7:45 a.m., a decline of $0.93, or 0.5 percent. DemandTec stock had risen to near the price IBM agreed to pay in the acquisition, hitting $13.09, an increase of 55.3 percent. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak. ___ (c)2011 the San Jose Mercury News (San Jose, Calif.) Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com Distributed by MCT Information Services |