IBM closes $1.3B Kenexa acquisition

IBM has closed its US$1.3 billion acquisition of Kenexa, intended to boost IBM’s enterprise social collaboration offerings with Kenexa’s cloud-based human resources applications and IT services.

IBM paid $46 per share for Kenexa, which at the time the deal was announced on Aug. 27 represented a 42 percent premium for the company. Kenexa shares closed at $45.96 on Monday.

Kenexa shareholders approved the acquisition on Monday in a vote that was supposed to take place on Nov. 29 but that the company delayed to accommodate dissenting shareholders who wanted a higher price. The vote was postponed to give those shareholders a chance to review a proposal to settle a lawsuit they filed challenging the acquisition.

The proposal offers the shareholders dissenter rights, usually understood as a way of giving shareholders who don’t agree with an acquisition the option to cash out of the deal. The lawsuit was filed in the Court of Common Pleas of Chester County, Pennsylvania, and the settlement requires court approval, which is pending.

The deal also ran into some controversy in India, where Kenexa’s subsidiary there had leased 25 acres of land from the Andhra Pradesh state government in 2008 after pledging it would create 2,500 local jobs.

However, the company fell short of that jobs target, so IBM is returning about 21 undeveloped acres to the government and keeping about four acres where the subsidiary’s building sits and about 500 people work.

Kenexa is based in Wayne, Pennsylvania, and has almost 9,000 customers, about 2,800 employees and operations in 21 countries.

The company’s cloud-based applications are designed to help customers automate and manage HR functions like recruiting, compensation, performance management and employee surveys. Kenexa also offers complementary consulting services.

IBM plans to continue selling Kenexa’s applications and IT services on a standalone basis, while progressively bundling and integrating them with IBM enterprise social and HR software and services.

Kenexa competitors Taleo and SuccessFactors were acquired in the past year by Oracle and SAP, respectively, as larger vendors try to capitalise on strong growth for enterprise HR software.

IBM envisions adding a layer of enterprise social networking across the Kenexa applications, as social collaboration plays a growing role in recruiting and other HR functions.

IBM plans to talk in more detail about its plans for Kenexa at its IBM Connect 2013 conference next month in Orlando.

“We’ll be morphing our services and products and solutions into building a smarter workforce market,” said Tim Geisert, Kenexa’s chief marketing officer.