Verity Inc. (NASDAQ:VRTY) announced it has signed a definitive agreement to be acquired by Autonomy Corporation plc for approximately $500 million, or $13.50 per share. Shareholder directors and executive officers of Autonomy and Verity have agreed to vote shares they own in favor of the acquisition. The all-cash transaction, which requires shareholder approval, is expected to close in late 2005/early 2006 and is subject to customary regulatory closing conditions. When the transaction is closed, the combined entity will be branded Autonomy and maintain global headquarters in Cambridge, England while Verity will become the base for U.S. operations. Dr. Mike Lynch, Autonomy’s group CEO and co-founder will continue as CEO of the expanded group. Anthony J. Bettencourt, CEO of Verity, will assume the role of CEO, Autonomy, Inc., the company’s U.S. unit. Once completed, this transaction is expected to be earnings enhancing (before any amortization of intangible assets) to Autonomy in the first full quarter following completion.

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