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Summary:

IBM is paying $1.3 billion for HR management software provider Kenexa in a deal that will help it keep pace with Oracle and SAP, which have also made big acquisitions in the talent and recruiting software space.

kenexa
photo: Kenexa

IBM is acquiring recruiting and talent software management provider Kenexa for $1.3 billion or $46 a share in a bid to bolster its social business capabilities and build out its HR services. IBM is following in the footsteps of Oracle and SAP, which bought Kenexa competitors Taleo and SuccessFactors respectively in the last year.

IBM plans to use Kenexa’s HR management software and combine it with its consulting and social tools to create a “smarter workforce.” The goal is to apply IBM’s focus on big data and social technologies to Kenexa’s HR and talent management software, helping companies extract more relevant insights and help them put together the right teams for the projects they’re working on.

The company is paying a 42.5 percent premium over Kenexa’s closing price on Friday. The deal highlights IBM’s push to meld social technologies with its business offerings.

“Every company, across every business operation, is looking to tap into the power of social networking to transform the way they work, collaborate and out innovate their competitors,” said Alistair Rennie, general manager, social business, IBM. “IBM is uniquely positioned to help clients generate real returns from their social business investments, while helping them gain intelligence into the data being generated in these networks to be more competitive in their markets.”

IBM’s acquisition also highlights the growing consolidation in the HR software market. In December SAP paid $3.4 billion for SuccessFactors. Oracle followed up in February, buying Taleo for $1.9 billion. Workday, an HR startup created by former PeopleSoft leaders, has been growing quickly and has helped throw more attention on this market.

Kenexa has about 9,000 customers, including half of the Fortune 500, who use its cloud-based software tools for recruitment, assessment, learning and performance management. The Wayne, PA-company, founded in 1987, has 2,800 employees. The deal is expected to close in the fourth quarter pending shareholder approval and regulatory reviews.

  1. An interesting acquisition, but they (IBM) need to do something to remain relevant in the market. I wish them well.

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