Autonomy to acquire Virage

Autonomy Corporation plc, Cambridge, U.K., is planning to buy Virage Inc., San Mateo, Calif., in a $24.8 million cash deal, Autonomy announced Thursday. Autonomy is paying $1.10 a share for Virage stock.

Autonomy is acquiring the company to extend its own presence in selected markets, including government and education markets, according to Michael Lynch, CEO of the Autonomy.

"By purchasing Virage, Autonomy is gaining?a strong customer base for upsell opportunities," Lynch during a July 10 press call.

The boards of directors at both companies have approved the transaction, which is expected to close by the end of September. Virage will operate as a separate division, with its brand name remaining in tact.

Autonomy sells software solutions that automate the indexing, retrieval and delivery of rich media files, such as word processing documents, Web pages, spreadsheets, e-mail, audio and video. Virage sold a number of rich media products, such as software that encodes and indexes video files, and solutions that manage rich asset libraries.

Virage's government customers can expect sales calls from Autonomy, as Autonomy plans to leverage Virage's government client list for its own product line, Lynch said. Autonomy will also gain a presence in the education market, one of Virage's focus areas.

Virage's government customers included the Army, the National Institutes of Health Centers for Disease Control and Prevention, FBI, the Library of Congress, NASA, Navy, Sandia National Labs, the Senate and intelligence agencies.

Autonomy reported $51 million in sales for 2002, with net income of $6.1 million, according to Hoover's Online of Austin, Texas. The company's U.S. federal government customers include NASA and the Departments of Commerce, Education, Energy, Defense and Labor.

Autonomy will replace those elements of Virage's technologies that Virage licensed from other companies, reducing software cost, Lynch said. Some of Virage technology will also appear in Autonomy's product lines and the two product lines will be more tightly integrated, according to Richard Gaunt, chief technical officer of Autonomy.