Cravath, Pepper Hamilton lead as IBM buys Kenexa for $1.3bn

The deal will see IBM acquire Pennsylvania-based Kenexa in an all-cash transaction at a price of $46 (£29.10) per share, for a net price of an estimated $1.3bn. The transaction is expected to close in the fourth quarter of 2012, subject to approval by Kenexa’s shareholders and regulators.

Cravath New York corporate partner Scott Barshay led the deal for IBM alongside M&A associates Keith Hallam and Deborah Eltgroth, executive compensation and benefits attorney Michael Krasnovsky and associate Jonathan Katz, tax associate Leonard Teti and summer associate Daniel Cerqueira.

Pepper Hamilton acted as Kenexa’s legal adviser, with a team led by Philadelphia commercial partner Barry Abelson and Berwyn-based commercial co-chair John Duke alongside corporate and securities associates Scott Jones and Shirley Kulmann.

It is understood that IBM will use Kenexa software to bolster its business-analytics offering. Kenexa’s clients include Starbucks, General Electric and Boeing.

Background to this deal:

Cravath has acted as longstanding counsel to IBM, having represented the company in 95 M&A deals since 2000, aggregating more than $40bn. This includes its acquisition of Green Hat, a specialist in cloud software testing (18 June 2012).

Pepper Hamilton partner Barry Abelson has been a member of Kenexa’s executive board since 2000.

The deal comes as a growing number of the world’s leading technology companies are making choice acquisitions to expand their cloud computing and social networking footprint.

In June Orrick Herrington & Sutcliffe and Perkins Coie acted as Microsoft acquired corporate social networking operator Yammer for $1.2bn (26 June 2012).

Meanwhile, in July Fenwick & West and Gunderson Dettmer advised when Cisco acquired cloud security startup Virtuata (25 July 2012).

IBM was one of 20 companies profiled in this year’s The Lawyer Transatlantic Elite, alongside other tech giants such as Apple, Facebook, Google and Microsoft.