International Business Machines Corp. (IBM) agreed to buy Kenexa Corp. (KNXA) for about $1.3 billion in cash, adding social-networking services that help companies handle human resources and recruiting.
IBM will pay $46 a share for the Wayne, Pennsylvania-based company, a 42 percent premium over the stock’s closing price on Aug. 24. The deal is expected to be completed in the fourth quarter, IBM said today in a statement.
The purchase bolsters IBM’s business-analytics software, which helps companies cull vast amounts of data to make decisions and study trends. Kenexa works with more than 8,900 customers, including Starbucks Corp., General Electric Co. and Boeing Co. Armonk, New York-based IBM has spent $16 billion on 30 analytics acquisitions in the past five years.
“This ties very directly into the investments we’ve made in helping clients create enterprise social networks and how we apply analytics,” Alistair Rennie, IBM’s general manager of social business, said in an interview. “This idea of how you leverage talent and bring it forward has become a significant operational issue.”
IBM will focus on analysis of the communication patterns using Kenexa’s systems, Rennie said. The company has been moving into software and analytics for income growth as hardware and services become less profitable. Kenexa’s software helps companies recruit new workers, communicate with employees about goals and develop succession plans.
The acquisition follows deals by IBM’s competitors for human-resources software makers, including SAP AG (SAP)’s agreement in December to purchase SuccessFactors Inc. for $3.4 billion and Oracle Corp. (ORCL)’s $1.9 billion takeover of Taleo Corp., announced in February.
Kenexa is unlikely to get a rival bid because of the price IBM is paying and because there probably won’t be regulatory delays, Bryan Schwartz, an analyst with Oppenheimer & Co. in New York, said in a note to investors.
Kenexa shares jumped 41 percent to $45.79 at the close in New York. They have climbed 71 percent in 2012. IBM, up 6.4 percent this year, fell 1 percent today to $195.69.
The $1.3 billion purchase price excludes Kenexa’s cash on hand. The company had about $90 million in cash and short-term investments at the end of the second quarter. IBM is aiming to generate $16 billion from business analytics by 2015.
Lazard Ltd. served as Kenexa’s financial adviser, while Pepper Hamilton LLP was its legal adviser.
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