U.K. enterprise search provider buys Zantaz

Autonomy Corp. PLC, a U.K.-based enterprise search software company, has acquired Zantaz for $375M in cash, signaling more consolidation in records management and e-discovery.

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U.K.-based enterprise search software company, Autonomy Corp. PLC has snapped up records management provider Zantaz Inc. 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 acquisition of records management software firm, Accutrac.

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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 rationalizing 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. "Organizations 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 organization generated by phone calls, voice mail, email, instant messaging, documents and videos for litigation purposes.

"Companies are rapidly recognizing 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.

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