Verity Buys Inktomi's Corporate Search Assets

Verity Inc. is taking a step to extend its reach downstream in the corporate search market by acquiring the enterprise search assets of Inktomi Corp. for $25 million in cash. The deal sets up Verity to establish itself with small and midsize companies that can afford Inktomi's search technology. The average deal size for Inktomi's enterprise search business is about $18,000, compared with Verity's average sale of $128,000.

During a conference call Wednesday, analysts responded favorably to Verity's decision to reach out to smaller customers, "where, admittedly, we've struggled because of our higher-end product," said president Anthony Bettencourt. Steve Jue, an analyst with RBC Capital Markets, called the deal "a great technology acquisition at a very attractive price."

Once the purchase receives regulatory and shareholder approval, Verity will take possession of Inktomi's search, categorization, and content-refinement tools, as well as its XML technology assets. In addition to the cash payment, the knowledge-management vendor will assume Inktomi's obligations to enterprise search customers, including support. The transaction is expected to close within 60 days.