Autonomy Corp. announced to acquire Interwoven for $775 Million at $16.20 per IWOV share. According to a recent press release a shareholder class action lawsuit for breaches of fiduciary duty and other violations of state law against, inter alia, by the board of directors of Interwoven, Inc. (Nasdaq:IWOV) arising out of their attempt to sell the Interwoven to Autonomy Corporation plc has been filed.
According to the press release the proposed deal for $16.20 per share in cash for each share of Interwoven is unfair. Autonomy Corp. announced last Thursday that it agreed to acquire software firm Interwoven Inc. for $775 million, boosting its presence in the U.S. and gaining access to the growing legal software market. Interwoven shareholders will get $16.20 for each share. Autonomy said it will place about 21.6 million shares, or 9.99% of its existing share capital, seeking to raise about £220 million ($307.6 million) to help fund the deal and it expects the deal to close in the second quarter of 2009. The balance will come from a new revolving credit facility with Barclays PLC and cash reserves.

Under the terms of the agreement, shareholders of Interwoven, Inc will receive $16.20 cash for each IWOV share of Interwoven they own, a 37% premium to Wednesday's $11.84 closing price on the Nasdaq Stock Market. Autonomy shares rose 3.8%, or 39 pence, to £10.72 ($15) in London Thursday.

According to the press release the transaction is unfair, given that, among other things, Interwoven, Inc.'s shares (Nasdaq:IWOV) traded above $16 per share as recently as August 2008 and Interwoven, Inc reported significant earnings per share improvement and a 90.5% increase in net income in the most recent quarter as compared to the same quarter last year.

Also, the sales process Interwoven, Inc conducted was flawed, so the press release, given that, in contravention of their fiduciary duties to maximize shareholder value, the its Board agreed to a no-solicitation provision and a $25 million termination fee which will ensure no superior offer will ever be forthcoming.

The proposed acquisition is subject to customary conditions and regulatory approvals.

Interwoven, Inc. (Interwoven) is a provider of content management software solutions. Interwoven provides solutions for the enterprise, professional services and global capital markets. Interwoven has 4,600 customers, including 71 percent of the top 100 law firms and 100,000 corporate websites. The acquisition is expected to be completed by the second quarter of 2009 and is subject to Autonomy and Interwoven shareholder and regulatory approvals and other closing conditions.