Autonomy Acquires Interwoven for $775 Million
In a move looking to change the way Global 2000 corporations, leading law firms, and government regulators cull and manage information from day-to-day interactions, United Kingdom–based infrastructure software company Autonomy has entered into a definitive agreement to acquire San Jose, Calif.–based content management solution provider Interwoven for $775 million. The deal works out to approximately $16.20 in cash per outstanding Interwoven share of stock. According to statements released by both vendors, the deal is expected to close in the second quarter of 2009.
According to a statement released by Autonomy, the combination of the company's meaning-based computing technologies, known as IDOL, with Interwoven's suite of products focused on managing the interactions of people and content, can create a new set of technologies that will allow users to identify specific customer interactions and gauge what they actually mean. Autonomy also suggests that the combined customer base of more than 20,000 will provide additional scale and significant cross-selling opportunities, in addition to accelerating the delivery of next-generation software for managing unstructured information.
For Autonomy, the acquisition also marks a global push into the legal and compliance industry. "The combination...will continue the extension of IDOL as a key element of the regulatory, legal, and compliance industries," said Mike Lynch, group chief executive officer of Autonomy, in a statement. "We are very familiar with Interwoven, its product base, and management team through our partnership and joint customers over the years and see this transaction as an exciting opportunity to extend the chain of Autonomy's solutions."
The move also takes into consideration regulatory changes that since 2006 have been forcing law firms to change the handling of information from daily interactions. One such change was introduced to the U.S. Federal Rules of Civil Procedure, requiring larger volumes of content to be processed between the client and the law firm.
The news apparently came as a surprise to many analysts, in part because Interwoven had been doing well independently, according to Kathleen Reidy, senior analyst at global information technology analysis and consulting firm The 451 Group. "I wasn't expecting the company to be acquired by a vendor that really isn't all that much bigger than [itself]," Reidy says of the move.
Even so, Reidy says the move makes great sense for Autonomy. "Interwoven has a couple of things [Autonomy] wants," she says. "The main [one] being the document- and records-management software Interwoven sells to the legal industry. The company owns the industry from [that] perspective." Numbers back up her claim: Interwoven's 4,600 customers include 1,200 law firms, nine of BusinessWeek's top 10 global brands, and 21 of the Forbes Global 30.
Questions remain, though, about what will happen to the other half of Interwoven's business, a high-profile role in content management. The company powers 100,000 Web sites, intranets, and extranets, Reidy says, adding that she believes that business line is still going strong for Interwoven but doesn't jibe with what Autonomy has been investing in.
Interwoven, Reidy says, has traditionally kept the legal and compliance-search side of its business separate from the Web content management side -- which she says she expects will still run autonomously. "It probably will remain fairly independent," she says. "The question will come in terms of whether or not Interwoven or Autonomy invest in new areas of online marketing that it would have if [the former had] remained independent."
While inquiries to Autonomy went unanswered and an Interwoven representative could not be reached by press time, a statement from Joe Cowan, Interwoven's chief executive officer, reflects the optimism for future innovation with the new pairing: "We believe customers will benefit from the combination of Autonomy's industry-leading technology with [our] unmatched position in our target markets. We are extremely excited with the unique possibilities for future product direction that will arise through the integration with Autonomy's technology."
Reidy believes that, overall, this move reflects an emerging -- and growing -- emphasis in the broader information management market. "It's definitely on the compliance, risk management, and e-discovery pieces of the [industry]," she says.
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