ARMONK, N.Y., Mon Aug 27, 2012 – IBM Corp. will buy Kenexa Corp. for about $1.3 billion to enter the human resources software market in a move that would likely increase competition with Oracle Corp and SAP AG who recently bought into the sector.
The deal underpins the importance that slow-growing technology giants place on faster-growing, web-based software makers, whose products are less vulnerable to the economic downturn as there are no upfront costs for program licenses, dedicated hardware or installation.
Germany’s SAP bought Kenexa’s competitor SuccessFactors for $3.4 billion in cash last December, while Oracle bought rival Taleo Corp. for about $1.9 billion in February.
The two companies made other cloud purchases, including RightNow Technologies and Ariba Inc.
Kenexa shares jumped nearly 42 percent, equaling the premium offered, to a life high of $45.92 on the New York Stock Exchange on Monday. Shares of peer Cornerstone OnDemand Inc were up 7 percent at $26.82 in afternoon trading.
The acquisition suggests that IBM is ready to find a foothold in the fiercely competitive market for delivering business applications via the web.
It brings the company face-to face against close partner SAP and rivals Oracle and Salesforce.com Inc., the largest maker of web-based software in a crowded market.