Terms of the deal call for Oracle to pay $46 per share in cash for Taleo, a premium of 18% over the Dublin, Calif.-based target's Wednesday close. Led by its billionaire founder and CEO Larry Ellison, Oracle has been an active acquirer of companies that provide software hosted by its own servers instead of with the customer.

Last October Oracle, of Redwood City, Calif., agreed to buy cloud-based customer service software provider RightNow Technologies Inc. for $1.5 billion.

Taleo's software is designed to help organizations attract, develop and retain employees. Oracle said it intends to integrate Taleo's products into its larger suite of human resources and other offerings for employers.

"Human capital management has become a strategic initiative for organizations," Oracle executive vice president Thomas Kurian said in a statement. "Taleo's industry-leading talent management cloud is an important addition to the Oracle Public Cloud." Taleo's CEO is Michael Gregoire.

The deal comes just months after Oracle rival SAP AG struck a $3.4 billion deal to acquire SuccessFactors Inc., a Taleo competitor. Both SAP and Oracle have been playing catch up in the cloud, trying to compete with upstart Salesforce.com Inc.

Taleo shares jumped nearly 20% when the SuccessFactors deal was announced on speculation the SAP transaction could spur a counter-move by Oracle.

Ovum chief analyst Tim Jennings called the Taleo deal "the latest in an aggressive and competitive wave of market consolidation in the cloud-based human capital management space," saying that the transaction signals that customers are growing more accepting of cloud-based products.

"Both Oracle and SAP have existing on-premise [human capital management] solutions, but both have been prepared to pay out large sums on cloud-based equivalents, rather than simply transitioning their existing solutions to the cloud," Jennings noted.