Autonomy buys Iron Mountain assets for $380mn

LONDON, UK: British software group Autonomy moved further into fast-growing cloud computing, which allows access to data and applications over the Internet, by buying assets from Iron Mountain for $380 million.

"This acquisition makes Autonomy the cloud platform of choice, processing and understanding 25 petabytes of customer information," chief executive Mike Lynch said. A petabyte is a million billion bytes.

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Autonomy, which helps organisations search unstructured data such as email and phone calls, said it was buying digital archiving, eDiscovery and online back-up and recovery solutions, assets expected to have annual revenues of $130-$140 million.

Cost synergies should hit $40 million per year over the first year from completion and Autonomy expected adjusted earnings per share accretion of around 15 per cent in 2012.

UBS said in a note the synergy target seemed very plausible as research and development and overheads could be cut.

Acquisitions have helped Autonomy grow its customer base, and have taken its technology into new areas such as document management. The Iron Mountain deal adds six petabytes of data and 6,000 customers to its total base of more than 25,000 users.

Goldman Sachs said the deal would enable Autonomy to further consolidate its lead in the archiving and e-discovery data market while also making it the most scalable and functional cloud platform for data.

Companies have increasingly been turning to cloud platorms, whereby data and applications are stored on remote servers and accessed over the web, because they offer increased flexibility and reduce capital expenditure on hardware.

"We believe accretion for 2012 is likely conservative and understates possible revenue growth acceleration from the cross selling of the acquired back-up and data protection products," Goldman Sachs said in a note.

"Given Autonomy's strong track record with acquisitions, and a similar playbook to previous deals, we expect the news to be well received by the market."

Autonomy, whose patented algorithms are used by companies such as Coca-Cola and Shell  to keep tabs on their information and comply with tougher data regulations, raised 500 million pounds ($810 million) in February 2010, with one or more major US-based acquisitions in mind.

Lynch said the Iron Mountain deal was not the large acquisition initially targeted. Autonomy baulked at pressing ahead with that deal -- with an unnamed party -- after due diligence, and the chances of it being completed have faded.

The cash consideration for the Iron Mountain deal of $380 million will be funded from Autonomy's existing cash reserves.

Autonomy said it would have a gross cash balance of at least $700 million once the deal had closed.