HR News & Trends, HR Technology

Another Tech Deal: IBM Buying HR Software Maker Kenexa for $1.3 Billion

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Another big acquisition in the HR world: IBM announced this morning that it was buying Kenexa, a leading provider of recruiting and talent management solutions, for $1.3 billion.

For Kenexa shareholders, the deal means they will be getting $46 per share, or 42 percent above Friday’s closing stock price.

According to an IBM press release, “The acquisition accelerates IBM’s leadership in helping clients embrace social business capabilities to transform every part of their business, while gaining actionable insights into the enormous stream of information generated and use it in a meaningful way.”

IBM also told Todd Raphael at ERE.net (a sister website of TLNT) that Rudy Karsan, the well-regarded founder and CEO of Kenexa, will stay with the new company after the acquisition is complete.

Expanding their “social footprint”

As The New York Times noted:

Technology giants are paying hefty premiums to rapidly expand their social footprint. The Kenexa deal, for instance, comes on the heels of Microsoft’s billion-dollar deal for Yammer, the enterprise social network. That $1.2 billion acquisition, announced in June, was seen as Microsoft’s first big push into the market. Salesforce.com, meanwhile, recently purchased Buddy Media, the social media advertising business, for $698 million.

The flurry of acquisitions underscores the increasing importance of social in the workplace.

The boom of social applications on the Web, led by companies like Facebook and Twitter, has also influenced business managers, who are now trying to figure out how to best leverage the connectedness of the Web to manage projects and employees. According to a recent study by IBM, about 57 percent of chief executives interviewed indicated that social business was a top priority and the vast majority of this group planned to make “significant investments” in this arena.

Kenexa will help the company bolster its current suite of social enterprise tools, a group that includes social networking and instant messaging solutions. Kenexa, based in Wayne, Pa., has 2,800 employees and some 8,900 customers.”

Kenexa deal causing jump in HR tech stocks

Eric Savitz at Forbes reported that IBM said it “plans to continue to support Kenexa clients and enhance Kenexa technologies while allowing these organizations to take advantage of the broader IBM portfolio.”

It also noted that other HR software companies are seeing their stocks jump in the wake of the Kenexa-IBM deal. Shares of “Cornerstone OnDemand this morning have spiked $1.72, or 6.9 percent, to $26.82 on the Kenexa news, while Saba Software is up 59 cents, or 8 percent, to $7.96.”

Reuters pointed out that this deal for Kenexa “underpins the importance large technology companies place on niche, web-based software makers, and these acquisitions are expected to plug holes in their own product offerings. Germany’s SAP bought Kenexa’s competitor SuccessFactors for $3.4 billion cash in December, while Oracle bought rival Taleo Corp for about $1.9 billion in February.”

IBM says it’s buying Kenexa to bolster “social business initiatives.” IBM tells me that Rudy Karsan, the well-regarded founder and CEO of Kenexa, will stay with the new company.

John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management magazine and workforce.com. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon.