Enterprise search software company, Autonomy has snapped up
records management provider Zantaz for approximately $375 million
in cash, signaling further consolidation around electronic
discovery, or better known as e-discovery. The deal comes a week
after Iron Mountain's acquisitionof
records management software firm, Accutrac.
The combination of Autonomy, which claims 17,000 customers
worldwide, and Zantaz will bring together information risk
management, search, archiving, e-discovery analytics and policy
management in one system, the companies claim. Dr. Michael Lynch,
group CEO of Autonomy, said the purchase of Zantaz gives Autonomy a
ready-made
software-as-a-service distribution channel for Autonomy's
products that it doesn't have today.
For Zantaz's part, "We were in process of rationalising our
search capabilities and figuring out how to consolidate to one
search tool when Autonomy came along," said Bob Little, vice
president of product marketing at Zantaz. The company is currently
using older search capabilities from Altavista, Lucene (an open
source index search engine), and Hummingbird, embedded in its
archival and litigation discovery tools. "These were all going to
be refreshed in the next six to nine months," according to Little.
He said Autonomy's "concept mapping and the ability to cluster
related documents together is at the cutting edge of search… it
looks at the whole archive and how pieces of it relate to each
other."
Historically, search tools have been implemented around matching
keywords, but for today's purposes, where companies are governed by
tight regulations and sometimes must find emails and documents in
24 hours, keyword matching is not powerful enough, analysts say.
"Organisations need full context search and detailed analytics,"
which is what Autonomy brings to the table, according to Stephanie
Balaouras, senior analyst with Forrester Research Inc.
Autonomy recently introduced a product called Idol Echo, built
on top of its Idol (Intelligent Data Operating Layer) 7 enterprise
search software. It claims Idol Echo can track and trace the
lifecycle of all data within an organisation generated by phone
calls, voice mail, email, instant messaging, documents and videos
for litigation purposes.
"Companies are rapidly recognising the importance of being able
to proactively retain, classify and quickly extract meaningful
evidence from terabytes of email, documents, spreadsheets, audio,
video and other unstructured data for compliance and litigation
purposes," said Steve King, Zantaz president and CEO.
Financial details
The purchase price of approximately $375 million in cash is
after certain deductions, funded by an underwritten placing, a term
loan and a portion of Autonomy's cash reserves. It is expected to
be accretive to earnings in the first six months, and the companies
predict costs synergies of approximately $25 million per year.
Tax losses brought forward will be assumed with a net present
value of approximately $45 million. Post closing, Autonomy expects
to have a cash balance of approximately $75 million. Steve King,
CEO of Zantaz, will retain his position as CEO of the company,
which will become a division of the Autonomy group. The transaction
is expected to close by August 2007 and is subject to regulatory
approvals and other customary closing conditions. Zantaz has 500
employees, bringing Autonomy's total headcount to 1,400. There are
no layoffs expected as part of the acquisition.