DealBook: I.B.M. Snaps Up Kenexa

Kenexa is a Web-based maker of recruitment software.

For enterprise software businesses with a social spin, valuations are rising.

I.B.M. announced on Monday that it had agreed to acquire Kenexa, a maker of recruitment software, for $1.3 billion in cash. I.B.M. is paying Kenexa shareholders $46 a share, 42 percent above the closing stock price on Friday.

Kenexa is a Web-based service that is part of the so-called social business vertical. Its software is intended to help companies recruit and manage talent through online social networking, collaboration and consulting tools.

“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,” Alistair Rennie, general manager of I.B.M.’s social business division said in a statement. “I.B.M. 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.”

Shares of Kenexa rose nearly 42 percent during the first hour of trading, while I.B.M. shares were down less than 1 percent.

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. And Salesforce.com recently purchased Buddy Media, the social media advertising business, for $698 million.

The flurry of acquisitions underscores the increasing importance of social media 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 I.B.M., 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 area.

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 about 8,900 customers. The company reported a profit of $1.9 million in 2011 on revenue of $282.9 million. Revenue was up 44 percent from the previous year.

The Kenexa acquisition is expected to close in the fourth quarter of this year.

Article source: http://dealbook.nytimes.com/2012/08/27/ibm-snaps-up-kenexa/?partner=rss&emc=rss