IBM ‘s DemandTec Buy to Contest Oracle, SAP

IBM, the No. 2 computer giant, said it plans to acquire e-commerce specialist DemandTec for $440 million to beef up its retail and marketing software services.

The move comes after its software rivals Oracle and SAP previously snapped up retail software rivals such as Retek and TopTier Software, respectively.

IBM said it will pay $13.20 share for the San Mateo, Calif.-based DemandTec, a 56 percent premium over Wednesday's closing price of $8.43. That valued the retail specialist at only $280.6 million. Enterprise value is $216 million.

Armonk, N.Y.-based IBM said it will insert DemandTec into its Smarter Commerce initiative, which concentrates on the retail and commercial sector. Bringing science to the art of pricing and promotion is a big part of this strategy, said Craig Hayman, IBM general manager of industry solutions.

Dan Fishback, DemandTec CEO, said the takeover was a perfect fit. Previously, DemandTec shares had lost 22 percent this year.

IBM, which reported cash and investments of $11.1 billion in the third quarter, has made several incremental software acquisitions this year, headed by the $287 million purchase of Canada's Algorithmics. This week, it announced the purchase of Ireland's Curam Software, a specialist in public sector programs, for a report $150 million.

Rival SAP of Germany on Dec. 3 announced plans to acquire SuccessFactors, also of San Mateo, Calif., for $3.4 billion, to obtain its performance-evaluation software. Oracle, of Redwood Shores, Calif., previously paid $10.5 billion for PeopleSoft in 2005 to bolster its position in that sector.

IBM shares fell about $1 at the opening, trading at $192.95. DemandTec shares jumped 55 percent to $13.09, after a delayed opening.