British software firm Autonomy acquires American peer Interwoven for $775 million

In spite of the global slowdown, dealmaking has not ground to a standstill. British software maker Autonomy Corp has announced a deal to acquire Interwoven Inc., an American data management software company, for $775 million to help speed delivery of new software and expand its customer base.

Autonomy said it will pay Interwoven shareholders $16.20 per share, a premium of 36.8 per cent above the San Jose, California company's closing share price Wednesday of $11.84. Post this announcement, Interwoven's stock soared $3.58, or 30 per cent, to $15.42 in morning trading.

Interwoven is strong in content-management software and historically competed with Documentum, now a unit of EMC Corp, FileNet, now part of IBM and Open Text of Canada. Interwoven has 4,600 customers, including 71 per cent of the top 100 law firms and 100,000 corporate websites.

Autonomy said cash from both companies' reserves and a new revolving credit facility from Barclays fund the deal. Autonomy said the companies' combined customer base will total 20,000, providing "significant cross-selling opportunities."

The deal is expected to close in the second quarter. Combined, the two vendors will have more than 20,000 customers, and will constitute "the largest company dedicated to the legal information management industry," according to a statement.

The company said the acquisition should save about $40 million a year in costs and help Autonomy improve and expand its software portfolio. It said the deal should boost 2009 earnings by 20 per cent including benefits from tax carry-forward losses and synergies. It was advised by Deutsche Bank and Morgan Stanley.

Earlier, Autonomy raised ?222.7 million ($306.5 million) in a share sale arranged by Citigroup, Deutsche Bank and Morgan Stanley. It sold 21.56 million new shares, representing 10 percent of its enlarged share capital, at 1033 pence each, at par to Wednesday's close. That price values Autonomy at about 16 times 2009 earnings or 5 times enterprise value to sales in 2009.

Analysts said the deal would allow Autonomy - whose software helps firms search varied data including presentations, video and voicemail - to cross-sell to Interwoven's many law-firm clients as tougher regulation forces companies to manage data more carefully.