SuccessFactors (NYSE: SFSF), which SAP (NYSE:SAP) Dec. 3 agreed to buy for $3.4 billion, is itself swallowing a smaller fish.
The company paid $110 million in cash to acquire Jobs2web, a popular, cloud-based recruiting platform that lures top candidates through social networks, such as LinkedIn, Facebook, Bing and Twitter. Jobs2web's specialty is providing application-tracking tools that connect hiring managers with candidates.
The company also makes an analytics dashboard to help customers visualize data. Job2web's 150 clients include Merck, PepsiCo and Rackspace.
SuccessFactors, a popular provider of talent-management software that its hosts and delivers to human resources managers via a Web browser, will use Jobs2web to fortify its own professional recruiting software to "produce a transformational social recruiting engine."
SuccessFactors envisions Jobs2web's recruiting platform will be the "candidate magnet," with SuccessFactors taking over from the application to hire and everything after.
"It was easy for SuccessFactors to pull the trigger on acquiring Jobs2web, despite an extremely competitive acquisition fight for them, because they have so many powerful assets," Lars Dalgaard, founder and CEO of SuccessFactors, said in a statement.
Dalgaard added that Jobs2web is growing fast and "is disrupting the way companies can make social networks their friends in recruiting and not a distraction, helping hiring managers find people in ways they never could before."
Should the acquisition close before the end of the year as expected, Jobs2web will operate as a business unit within SuccessFactors. Customers may then choose to purchase Jobs2web to work with SuccessFactors Recruiting Management to operate with any other applicant-tracking system, or to operate as a standalone solution.
SuccessFactors' bid for Jobs2web comes even before the ink is dry on the Dec. 3 tender offer it signed with SAP to be acquired by the enterprise applications powerhouse. That deal should close in 2012.
SAP is paying $40 per share, or roughly a 52 percent premium over SuccessFactors' Dec. 2 closing price of $26.25 and 10 times the company's expected 2011 run rate of $300 million to $330 million.
Why pay so much for an unprofitable company? Three C-words: cloud computing clout. SAP has struggled to make its cloud strategy materialize in a meaningful way.
SuccessFactors meanwhile has a lot of cache in the space, versus the likes of Taleo, Kenexa and other Web-based human resources software makers, and should bring instant cloud credibility to SAP, which is competing in the space against Oracle (NASDAQ:ORCL), Salesforce.com (NYSE:CRM) and Microsoft (NASDAQ:MSFT).