Autonomy Acquires Zantaz for $375 Million

The enterprise search vendor is joining up with the archiving and compliance market leader.

Enterprise search vendor Autonomy announced July 3 that it has acquired privately owned e-mail archiving and e-discovery/compliance provider Zantaz for $375 million in cash.

Zantaz will operate as a wholly owned subsidiary of U.K.-based Autonomy, CEO Stouffer Egan told eWEEK. Steve King, CEO of Zantaz, of Pleasanton, Calif., will retain his position as CEO of the Zantaz division of the Autonomy group.

The transaction is expected to be completed by August, Egan said.

Autonomys Idol K2, acquired in the companys acquisition of Verity in 2005, is the dominant search engine in the corporate enterprise market.

Founded in 1996, Zantaz was one of the first companies to dedicate itself to e-mail archiving, electronic discovery and litigation support, and archive-on-demand. According to IT researcher IDC, Zantaz is the global market leader in content archiving and electronic discovery solutions, with about 1,000 blue-chip enterprise customers and about 25 percent market share.

Zantaz customers include nine of the top 10 global law firms, 11 of the Fortune 25 companies and 14 of the top 20 financial securities firms, a company spokesperson said.

/zimages/6/28571.gifClick here to read about Zantazs acquisition of Singlecasts data classification technologies.

However, its growth had slowed in the last two years. In a September 2006 report, IDC ranked Zantaz first in the market with a 26.8 percent market revenue share, with a 2004-2005 growth of 64.8 percent. At the time of the merger, Zantaz reported about 20 percent growth in 2006.

The combination of the two companies will give Autonomy/Zantaz a full spectrum of consolidated archiving, e-discovery, analytics and real-time policy management uniquely in one system, Egan said.

"At first blush, you might not think about this [merger] as a logical combination, but if you think about the core competencies of both companies, it makes a ton of sense," King told eWEEK. "We really will create a powerhouse in information risk management," he said.

Rumors of the impending sale of Zantaz had been circulating for more than a year. Much larger IT companies, such as IBM, Hewlett-Packard, Oracle, Iron Mountain and EMC, were said to be looking at the acquisition.

"This makes so much more sense, from a number of perspectives," King said. "If Zantaz had been acquired by a much larger entity, it would be natural for customers to ask, What happens to the technology, the products—will they get the same focus?

"Zantaz will continue to operate independently, keep the same brand and management team. ... The focus remains—except that its accelerated with access to a greater pool of resources, in terms of technology and distribution."

Zantaz now will have access to Autonomys 17,000 customers worldwide to help its marketing and channel distribution, King said.

"Theres no secret that this is an area ripe [of the IT market] for consolidation," Brian Babineau, storage/compliance analyst with Enterprise Strategy Group in Milford, Mass., told eWEEK. "Zantazs revenue makes a material impact to Autonomy. Zantaz now has a much bigger balance sheet."

In fact, this merger may spark a market trend of consolidation between e-discovery service providers and litigation support service providers, Babineau said.

"Theres a ton of niche legal service providers, and theyve been getting a lot of business because of this e-discovery spend, and people are starting to invest in technology that limits the amount of data that needs to be managed and handled by discovery service providers ... so there just cant be 20 to 30 of these guys that survive," Babineau said.

/zimages/6/28571.gifRead here about Scentrics data classification system for risk and compliance management.

Analyst Barry Murphy of Forrester Research told eWEEK that "this is a great purchase for Autonomy. They have already integrated Idol server into Zantazs archiving and eDiscovery applications, so they can capitalize on synergies immediately.

"eDiscovery is a hot market for both companies—the combined entities will have likely the best brand value in the eDiscovery space," Murphy said.

With organizations truly called to action by the Federal Rules of Civil Procedure, Autonomy/Zantaz now has the solution set to help implement a short-term solution that can evolve into longer-term information management strategies, Murphy said.

"This also makes Autonomy more attractive to the larger vendors, and I would not be surprised at all to see a CA, EMC, IBM or Oracle in turn acquire Autonomy," Murphy said. "Oracle makes the most sense as it is the only one of the big infrastructure vendors that lacks the message archiving capability that Zantaz could provide," he said.

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Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 13 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...