Autonomy to buy Zantaz for $375 mln, place shares

By John Bowker

LONDON (Reuters) - British search software firm Autonomy Corp (AUTN.L: Quote, Profile, Research, Stock Buzz) said on Tuesday it will buy U.S. group Zantaz Inc for about $375 million to tap the market for legal data and said second-quarter results would top forecasts.

Shares in Autonomy, which pulls together and analyses information from a range of mediums such as e-mail, video and audio, jumped as much as 10 percent in early trading.

Autonomy said it was partly funding the deal to buy Zantaz with an underwritten placing of 12.7 million new shares, expected to raise about $180 million.

Chief Executive Michael Lynch told Reuters the placing had been oversubscribed, while a separate placing to raise $100 million two months ago would also to be used to fund the deal.

Zantaz specializes in the capture and storage of vast amounts of data for legal reasons, and counts nine of the top ten global law firms among its customers.

Autonomy shares were up 8.9 percent at 793 pence by 0934 GMT, valuing the company at around 1.56 billion pounds ($3.14 billion).

Analysts at Seymour Pierce, Panmure Gordon and Numis Securities welcomed the deal, with the latter upgrading its target share price by 20 percent to 960 pence.

"We believe Zantaz is showing strong growth, at just over 20 percent per year, and combination of this and cost savings will drive significant growth in profit," Numis analysts said in a note.