Autonomy Buy Bolsters Technology, Customer Base

Enhancing its search technology and adding customers, Autonomy will buy video communications software maker Virage for about $13 million cash.

The latest move in the consolidating search sector extends Cambridge, U.K.-based Autonomy’s Intelligent Data Operating Layer (IDOL) platform, which automatically organizes and presents data, bolstering its ability to handle non-text content.

“The transaction will also significantly broaden Autonomy’s installed base of enterprise, media and entertainment, educational and government customers,” Autonomy CEO Mike Lynch said.

Virage’s software enables Webcasting, video publishing, video production and distance education. Its customers include Bloomberg, Citigroup, CNN, Coca Cola, the FBI, General Electric, Microsoft, MIT, the United Nations and several U.S. federal agencies.

Virage has about 100 employee, approximately one-third wiil be let go following the combination, a Virage spokeswoman said. Office consolidations are also a probable, although specifics have not been announced. The role Virage executives will play with the merged company has also not been revealed.

The boards of directors of both companies have approved the merger, and Virage stockholders must now vote. Autonomy expects it to add to earnings within six months of closing and said it will have $110 million in cash after the deal closes.

“(The deal) will enable Virage to provide enhanced products, as well as maintaining the support for the investment our customers have made,” said Paul Lego, chairman and CEO of San Mateo, Calif.-based Virage.

It also digs Virage out of a financial hole. The 8-year-old firm lost $18.1 million last year on revenue of $12.9 million, according to filings with the Securities and Exchange Commission.

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