In a move to beef up its enterprise and compliance search capabilities, Autonomy will acquire Interwoven for $775 million.

Autonomy said in its announcement Thursday that the combined company will become the largest in the legal information management industry, with more than 20,000 customers, including the top 1,200 largest law firms.

The acquisition will give Autonomy access to Interwoven's customer base of leading U.S.-based law firms. Law firms are treading through a wave of new work resulting from the surge in litigation following the 2007 passage of the U.S. Federal Rules of Civil Procedure and other recent regulatory and compliance measures.

The U.K.-based Autonomy has been making inroads into U.S. markets in recent years, based in large part on acquisitions. The company said the Interwoven acquisition will accelerate delivery of advance unstructured information management software and will enable the combined company to more quickly and efficiently search across "the chain of the client and the law firm. The acquisition also allows us to extend Autonomy's value chain of discovery, review, processing, early case assessment, linking those to the operations within the law firms."

The acquisition, which Autonomy expects will be consummated in the second quarter, will combine its intelligent data operating layer product, which seeks to understand content, and Interwoven's product suite, which is focused on managing interactions between individuals and content. The combination is expected to significantly reduce the amount of manual effort now required by the firms.

"Interwoven's products know what the customer interactions are," Autonomy stated, "and Autonomy's IDOL will allow them to know what they mean."

The new Federal Rules of Civil Procedure has created a flood of content volume between clients and law firms, which must be properly processed. In effect, the new company creates one-stop shopping covering more than 1,000 file formats, including e-mail, voice, Internet, images, schedules, tasks, calendars, and stock trades. Interwoven's products and services will enable Autonomy to spread them across more than 100,000 corporate Web sites, intranets, and extranets.

Autonomy noted that its offer of $16.20 in cash for Interwoven represents a premium of nearly 37% over Interwoven's previous closing share price. Autonomy said the directors of both companies have agreed to the acquisition.