IBM Boosts Social Business App Lineup With $1.3 Billion Acquisition

IBM sees opportunities to integrate Kenexa's applications with other IBM products, including its business analytics, social media, human resource management and business process management software and services, the company said Monday.

"It's all about changing the way people work," said Alistair Rennie, IBM general manager of social business, in a phone conference. "We see this as a big, strategic growth area."

[Related: IBM Pledges Assistance To Partners Transitioning To New Business Models ]

Rennie also said the combination of Kenexa's software and other IBM products "will create some unique and very high-value opportunities for the IBM partner community."

IBM said it expects to complete the acquisition later in the fourth quarter and will integrate Kenexa's operations with IBM's software and services groups. Kenexa CEO Rudy Karsan and the rest of the Kenexa management team will join IBM, executives said on the phone conference, but it wasn't clear whether all 2,800 Kenexa employees would be retained.

The $46-per-share cash offer for Kenexa is subject to Kenexa shareholder and regulatory approval.

Wayne, Pa., Kenexa reported fiscal 2011, ended Dec. 31, sales of $282.9 million, up 44 percent from $196.4 million in fiscal 2010. The company has more than 8,900 customers, including Boeing, Ford, General Electric and Starbucks.

With the Kenexa acquisition, IBM joins a growing number of vendors adding social media for businesses to their product lines. Salesforce has offered its Chatter service since 2010 and earlier this month announced plans to augment that with a new Salesforce Communities service. The company also recently acquired Buddy Media, a supplier of social media marketing applications.

Last month, Microsoft completed its $1.2 billion acquisition of Yammer, a developer of cloud-based social networking services for businesses. And, Oracle has announced the acquisition of several social media software companies in recent months, including social marketing application developer Vitrue and "social intelligence" software vendor Collective Intellect.

On the recruiting and talent management side, IBM's Kenexa acquisition parallels SAP's $3.4 billion acquisition of SuccessFactors, a developer of cloud-based human capital management applications, earlier this year.

PUBLISHED AUG. 27, 2012