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Autonomy Buys Zantaz By Phineas LambertThe DealJuly 19, 2007 Enterprise infrastructure software maker Autonomy Corp. PLC on Tuesday, July 3, agreed to buy U.S.-based archiving company Zantaz Inc. for $375 million to exploit the growing electronic discovery market. Pleasanton, Calif.-based Zantaz provides content archiving, electronic discovery products and software to enable organizations to retain and retrieve unstructured digital information, while Autonomy sells the platform for accessing such information. Zantaz generated earnings before interest, taxes, depreciation and amortization of $5.2 million on revenue of $100 million for the year ended Dec. 31. In the 11 years since it was founded, its VC backers have included General Atlantic Partners LLC, Athena Technology Ventures, Red Rock Ventures, ComVentures, Pyramid Technology Ventures, Geneva Venture Partners and Novus Ventures. The purchase will be Autonomy's largest since it bought data retrieval software maker Verity Inc. for $507 million in cash at the end of 2005. "We have been greatly impressed by Zantaz's products and will be continuing to develop and support the whole range," said Autonomy CEO Michael Lynch in a statement. "Our combined solution will be unique in offering our existing 17,000 customers end-to-end information rich risk-management solutions." Cambridge, U.K.-based Autonomy said the acquisition will be partly funded through the placing of 12.7 million shares and a term loan. On completion, Autonomy said it expects to have about $75 million in cash on its balance sheet. Shares in Autonomy were up almost 9 percent, or 64.5 pence, to 792.5 pence in London, giving the company a market cap of £1.67 billion ($3.36 billion). The announcement coincided with news that Autonomy expects record second-quarter 2007 results, with pretax profit and revenue ahead of the top end of analysts' forecasts. Derek Brown, an analyst at London-based Seymour Pierce Ltd., noted that the market for electronic discovery has been fast-growing since the revised Federal Rules of Civil Procedure require businesses to make readily accessible all relevant information from unstructured data like e-mails. "The deal provides a unique offering in the market: a hosted service for archiving combined with the applications for customers to choose which route to go by," Brown said. "There's a good cross-selling opportunity here." Autonomy expects the acquisition to be earnings accretive in the first six months and generate costs synergies of about $25 million per annum. Tax loss carry-forwards will be assumed with a net present value of about $45 million, it added. Steve King, the target's CEO, will keep his position as chief executive of the Zantaz division of Autonomy. Deutsche Bank AG acted as financial adviser to Autonomy. The deal, subject to regulatory approvals, is expected to be completed by August. Zantaz has agreed to pay a $10 million breakup fee to Autonomy, should it terminate the agreement.

Lawyers, iPods, Podcasting, Digital Rights...... Many of you have inquired about the legal references or linksassociated with this blog, there is a reason.Digital Rights Management (DRM) or Copy Right Lawshave forced its subject matter to the forefront of thisbusiness, duplication. Music (Napster) downloads firstlead this charge. YouTube sale to Google threw anotherlog on that fire. And Tuesdays announcement of Adobe'sbeta version of Digital Edition, [which "carefully"worded allows users to READ media content such aseBooks, digital publications and so forth], just keepsthe steam blowing. Remember a couple months agoGoogle and Yahoo were going to downloadpublications, that idea met a hail-storm. So Googletook the high road and just bought a video source.