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Struggling Salary.com is sold to Pa. firm for $80m

By D.C. Denison
Globe Staff / September 2, 2010

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Salary.com in Needham, an early leader in human resources software that has struggled recently, agreed yesterday to be acquired by Kenexa Corp., a larger firm in Wayne, Pa.

The purchase price was $80 million in cash.

Salary.com, which sells software and data to help clients manage employee compensation, was founded in 1999, at the height of the dot-com boom.

It went public in 2007, and its stock has traded as high as $15.90 a share. But the stock price suffered as the company attempted to expand through acquisitions. During most of the past year, the company’s stock has traded between $2.20 and $3.23. Yesterday’s purchase price works out to $4.07 a share.

Company revenues suffered in the recession, as customers reduced their hiring. In January 2009, Salary.com cut 100 jobs, 16 percent of its workforce. Further cuts left the company with around 400 employees. In February of this year, chief executive Kent Plunkett abruptly resigned.

Kenexa Corp., which has 1,400 employees in 20 countries, sells software to manage processes like recruiting, retention, and performance measurement. Founded in 1987, Kenexa went public in 2005. The following year, it acquired BrassRing, a workforce management software firm in Waltham, for $115 million.

Salary.com has several thousand customers that provide a fertile opportunity for Kenexa,’’ Kenexa chief executive Rudy Karsan said in a release yesterday.

The purchase “will give Salary.com a home with more resources to invest,’’ said Jim Holincheck, an analyst with the technology consulting firm Gartner Inc. in Stamford, Conn. Holincheck said the deal is part of a broader consolidation of the human resources software industry.

Lisa Rowan, an analyst at IDC, a technology research firm in Framingham, said the deal to acquire a trove of salary information makes sense for Kenexa. “If the economy comes back, human relations managers are going to be looking for the kind of data that Salary.com provides,’’ Rowan said.

D.C. Denison can be reached at denison@globe.com.