Autonomy swoops on Virage
Autonomy, the world's most hyped search software company post-AltaVista and pre-Google, is snapping up Virage Inc. for $24.8m.
The net purchase price of this US webcast and video production software developer falls to $13.3m after Virage's expected net cash balance is put into the pot. Autonomy expects the purchase to be accretive to earnings within six months of closing and says it will have a cash balance of around $110m on completion.
It will be interesting to see how Autonomy will turn around Virage, a company which lost a whopping $18.1 million on sales of $12.9m for the year ended March 31, 2003. The previous year, the company recorded a net lost of $27.8m on sales of $$16.7 million.
With a record like this you can see that Virage's cash balance wasn't necessarily going to last too long as an independent.
For its money, Autonomy gets c.400 Virage customers and the chance to shoehorn its unstructured search technology, IDOL, and its own video production software, Dremedia, into Virage products. It expects combined Autonomy and Virage products to hit the street in the first quarter post-acquisition.
In a statement, Dr. Mike Lynch, CEO, said Virage will "also significantly broaden Autonomy's installed base of enterprise, media and entertainment, educational and government customers."
Virage's board has recommended the deal which has already received 40 per cent acceptance. Broadview advised Virage on terms, while Autonomy used Deutsche Bank Securities. ®
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