IBM (NYSE: IBM) will spend about $1.3 billion for Kenexa Inc. (NYSE: KNXA), a maker of Web-based human-resources and recruiting services, part of its effort to reach $16 billion in annual analytics revenue.
Big Blue agreed to pay $46 a share in cash for the Wayne, Pennsylvania-based company, according to a statement Monday. The deal is expected to be completed in the fourth quarter.
Kenexa uses a social-networking approach to HR, working with more than 8,900 customers in financial services, pharmaceuticals, retail and other industries. It has about 2,800 employees in 21 countries.
The purchase bolsters IBM’s business-analytics software, which helps companies cull vast amounts of data to make decisions and study trends.
Kenexa customers include Starbucks Corp., General Electric Co. and Boeing Co.
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’s agreement in December to purchase SuccessFactors Inc. for $3.4 billion and Oracle Corp.’s $1.9 billion takeover of Taleo Corp., announced in February.
Kenexa stock jumped more than 41 percent to $45.86 in early trading. IBM shares slipped 89 cents to $196.88.
“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,” Alistair Rennie, IBM’s general manager of social business, said in the statement. “IBM is uniquely positioned to help clients generate real returns from their social business investments.”
In its announcement, IBM noted the growing importance of social media and related data.
“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 revealed 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.”
Knexa technology will be incorporated into IBM products and services.
“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, chief executive officer, Kenexa. “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.”
IBM employs some 10,000 people across North Carolina.
The acquisition is IBM’s second in two weeks. On Aug. 16, IBM disclosed plans to buy Texas-based Texas Memory Systems.
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(Bloomberg news contributed to this report.)