International Business Machines Corp. (NYSE: IBM), the No. 2 computer maker, said it will pay about $1.6 billion to acquire Kenexa Corp. (NYSE: KNXA), for its human-resources software and cloud technologies.
The move appears to bolster IBM's initiatives in the sector against Oracle (Nasdaq: ORCL), the No. 1 database developer, Salesforce.com Inc. (NYSE: CRM) and private Workday, whose managers ran PeopleSoft, now a part of Oracle, before its takeover in 2006.
IBM also said it wants to bolster its social media offerings in the enterprise market, where one of the few pure play companies is Jive Software Inc. (Nasdaq: JIVE). Facebook (Nasdaq: FB) concentrates on the consumer sector, where it claims more than 950 million members.
IBM, of Armonk, N.Y., said it expects to close the transaction next quarter.
Rudy Karsan, CEO of Kenexa, of Wayne, Pa., said "the customer is the big winner here." In an interview, he declined to say whether he had been trying ro sell the company even before IBM approached Kenexa's board. Deal specifics will be contained in proxy materials that will be sent to shareholders to approve the deal.
Karsan also didn't say when IBM first approached Kenexa. However, he said the prospect of joining IBM was compelling.
"If someone has a platform like IBM's and suggests, 'Take a look,' you can't not take a look," the Kenexa CEO said.
Kenexa employs 2,800 people in 21 countries to support about 8,900 customers. IBM emplpys nearly 434,000 worldwide.
IBM General Manager for Social Media Alistair Rennie said he expects to retain virtually the Kenexa employees.
"I'm staying," Kenexa's Karsan said, and will manage the company under the IBM umbrella.
IBM reported cash and investments exceeding $12.3 billion as of June 30.
Shares of IBM fell $2.08 to close at $195.69 in Monday trading, as Kenexa shares soared more than 40 percent to close at $45.79, up $13.40, just slightly below IBM's $46 bid price.
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