Rumors about the transaction had swirled about the blogosphere for the past couple of weeks.

The acquisition is subject to closing conditions, including regulatory approval, and is expected to be completed before the end of the second quarter.

Under the agreement, Taleo will pay about $128.8 million, based on Monday’s closing price for Taleo's Class A common stock of $20.32, for all of the outstanding capital stock of Vurv and the assumption of vested employee stock options.

Talent management applications refer to software tools for key HR tasks such as recruiting, performance management, compensation management and employee development. The products are among the fastest-growing applications in the HR software field, which is itself the fastest-growing category of business software.

Taleo and Vurv are among the leading vendors of talent management software. Others include SuccessFactors and Authoria. The biggest vendors of HR software, SAP and Oracle, also sell talent management products.

Jason Corsello, vice president at consulting firm Knowledge Infusion, called the deal “a significant moment in the talent management market” given the prominence of the two vendors. He expects Taleo to move Vurv customers to Taleo software over time. Such migrations can be disruptive to organizations.

“The big question mark is what does this migration look like for a lot of Vurv customers,” Corsello says.

The financial details of the deal consist of 4.1 million shares of Taleo Class A common stock, about $36.5 million in cash (subject to adjustment for third-party expenses and certain other specified items) and the assumption of as much as $9 million of debt. In addition, Taleo will also assume unvested employee stock options.

“This announcement marks an inflection point for talent management, making it easier for customers to realize the full benefits of unified talent management applications,” Taleo president and CEO Michael Gregoire said in a statement. “Together, we can help companies better manage workforce challenges brought about by shifting demographics, globalization and low levels of engagement.

“These challenges demand a new generation of talent management solutions that unify recruiting, performance, succession and compensation applications onto one comprehensive on-demand software platform,” he said. “This unified talent management solution will help companies identify and attract the best candidates, manage and motivate their workforce, and tie compensation to performance.”

“Taleo shares our vision and passion for helping customers around the world attract, retain and engage their people,” Vurv CEO Derek Mercer said in a statement. “Both Vurv and Taleo have independently built world-class organizations with extensive domain expertise and development resources. By bringing our two companies together, we will be better able to deliver talent management solutions addressing the advanced needs of our customers.”