IBM Buying Kenexa for $1.3B in Social Business Play

IBM plans to acquire Kenexa, a maker of social business software, in a deal worth $1.3 billion.

IBM announced it has entered into a definitive agreement to acquire social business company Kenexa for approximately $1.3 billion. The deal, announced Aug. 27, is aimed at bolstering Big Blue's ability to help its customers embrace social business capabilities while gaining actionable insights from the enormous streams of information generated from social networks.

Wayne, Pa.-based Kenexa specializes in recruiting and talent management solutions and brings a combination of cloud-based technology and consulting services that integrates both people and processes.

IBM said Kenexa complements its strategy of bringing relevant data and expertise into the hands of business leaders within every functional department, from sales and marketing to product development and human resources. As a result of this synergy, clients will be able to attract and develop the right skills to build the right teams, for the right projects, IBM said.

"Every company, across every business operation, is looking to tap into the power of social networking to transform the way they work, collaborate and out-innovate their competitors," said Alistair Rennie, general manager of social business at IBM, in a statement. "IBM is uniquely positioned to help clients generate real returns from their social business investments, while helping them gain intelligence into the data being generated in these networks to be more competitive in their markets."

The adoption of social business technology is supporting the growth of big data and the need for analytics in the enterprise, IBM said. A recent global IBM study showed that 57 percent of CEOs identified social business as a top priority and more than 73 percent are making significant investments to draw insights into available data.

The survey also showed that 70 percent of respondents cited human capital as the single biggest contributor to sustained economic value. The combined strengths of IBM and Kenexa are key differentiators at a time when organizations of all sizes are looking to increase workforce efficiencies and gain more insight from their business information, IBM said.

Moreover, social media has pervaded the lives of consumers, helping them connect with each other in new ways. However, a shift is occurring in the enterprise as business leaders look for ways to generate real value through the use of social technologies to evolve their front-line business operations. According to Forrester Research, the market opportunity for social enterprise apps is expected to grow at a rate of 61 percent through 2016.

"The customer is the big winner in all this because the combination of our two organizations will deliver more business outcomes than ever before," said Rudy Karsan, CEO of Kenexa, in a statement. "Together, Kenexa and IBM will be unmatched in the industry, offering solutions that extend from strategy to the technology platform to the delivery of services for clients."

Kenexa has more than 8,900 customers across a variety of industries, including financial services, pharmaceuticals, retail and consumer, including more than half of the Fortune 500.

With Kenexa in its fold, IBM will be able to offer strategic consulting, a social technology platform, and expertise on a global scale to help clients enable a smarter workforce and gain a competitive advantage in any market, IBM officials said.

The Kenexa acquisition will complement IBM's social business and HR business services leadership. More than 60 percent of Fortune 100 companies have licensed IBM's solutions for social business, according to IBM.

With operations in 21 countries worldwide, Kenexa has approximately 2,800 employees. Consistent with its strategy, IBM plans to continue to support Kenexa clients and enhance Kenexa technologies while allowing these organizations to take advantage of the broader IBM portfolio. IBM expects the transaction to close in the fourth quarter of 2012, subject to Kenexa shareholder and regulatory approvals and the satisfaction of other customary closing conditions.