IBM to acquire Wayne-based Kenexa for $1.3 billion

Tom Paine

Wayne-based Kenexa, one of the Philadelphia area's largest software as a service (SaaS) vendors, announced this morning it had agreed to be acquired by IBM for slightly less than $1.3 billion. That represents a 42% premium over its closing price on Friday.

Founded in 1987 by Chairman & CEO Rudy Karsan and others, Kenexa began primarily as a consulting and staffing firm helping its corporate clients manage their recruiting processes. Kenexa did not start off as a technology provider but evolved into one through internal development and numerous acquisitions. Although it later exited the staffing business, consulting services are still an important part of its overall offering. Kenexa completed its IPO in 2005. In 2011 it had revenue of $283 million and a net loss of $7 million. Kenexa has about 2,800 employees and about 8,900 customers.

The IBM-Kenexa deal follows a series of M&A transactions in the Human Capital Management (HCM) SaaS space, as SAP acquired SuccessFactors for $3.4 billion, Oracle acquired Taleo for $1.9 billion, and Salesforce acquired a smaller firm named Rypple, around which it is building its Work.com platform to be introduced next month at Dreamforce. Also, emerging powerhouse Workday is planning an IPO later this year. Kenexa, however, is not the same kind of animal as most of these, as it strengths are still in the talent acquisition (recruitment) and onboarding areas, although it has broadened its portfolio. Taleo is probably its most comparable major competitor.

While IBM emphasized in its announcement the "social business" aspects of Kenexa's platform, and many of the media accounts picked up that theme, I wouldn't really think of Kenexa as being a big social play right now though I'm sure its trying to move in that direction.



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