Autonomy is acquiring Zantaz, a provider of e-discovery and content archiving software, for $US375 million in cash, the companies announced Tuesday.
The combined Autonomy-Zantaz could be an attractive acquisition target for a larger infrastructure software vendor such as Oracle, IBM or EMC, said Barry Murphy, principal analyst at Forrester Research.
Autonomy, of Cambridge, England, will operate Zantaz, of Pleasanton, California, as a division of Autonomy. Zantaz CEO Steve King will retain his position at the Zantaz division.
The publicly traded Autonomy posted net profit of $US48 million on revenue of $US250 million in 2006, while privately held Zantaz reported $US106 million in revenue, according to a May 2007 IDC research report.
E-discovery is an emerging market within the field of data storage, archiving and recovery. Organizations are increasingly being called upon to produce copies of electronic documents, such as e-mail, voice mail and instant messages, to respond to lawsuits or government investigations. IDC reports the global market for e-discovery software and hosted services grew to $US477 million in 2006, an increase of 47 percent from 2005's $US330 million. The revenue split between software and hosted services is about 60-40 IDC reports.
The combination of Autonomy and Zantaz will bring together consolidated archiving, e-discovery, analytics and real-time policy management services into one system, the companies stated in a news release.
Zantaz will bring to Autonomy an e-mail archiving capability from the Zantaz portfolio, both as a software product and as a hosted service offering, said Murphy. Conversely, Autonomy will provide Zantaz with added market reach it had not been able to develop on its own.
"So Autonomy becomes very attractive as a combined entity with Zantaz to the software infrastructure giants," he said.
Autonomy says the acquisition will produce cost savings of $US25 million a year and be accretive to earnings in six months. The deal is expected to close by August, assuming shareholder and regulatory approvals are granted.