LONDON (Reuters) - Autonomy Corp (AUTN.L: Quote, Profile, Research) agreed on Friday to buy U.S. peer Verity (VRTY.O: Quote, Profile, Research) for $500 million in cash (280 million pounds) to gain a dominant position in the information handling software market and boost earnings.

Autonomy said it was raising 153 million pounds via a fully-underwritten rights issue to help pay for Sunnyvale, California-based Verity which supplies search and process management software to 15,000 customers worldwide.

Autonomy shareholders will be offered one new share at 256 pence for every two held. The rest of the financing comes from a term loan of $38 million, existing Verity cash reserves of $180 million and Autonomy's cash reserves of $10 million.

"This is an acquisition that is expected to create a strong undisputed global leader in the unstructured information management market," Autonomy's Chief Executive and co-founder Mike Lynch told reporters on a conference call.

"This opens us a whole series of cross-selling opportunities across 16,000 combined customers, and we see a high level of complementarity between the businesses."

Autonomy, whose software helps streamline the handling of content on computers, said the deal was expected to be earnings accretive in the first full quarter following completion, expected in late 2005.

The UK company, whose customers include IBM, Boeing and several U.S. federal agencies and the U.S. army, said it expected to achieve annualised cost synergies of $20 million in the first year following the deal.

Chief Financial Officer Sushovan Hussain said the savings would come primarily from cutting regulatory costs in the United States, duplicative sales and marketing expenses and lower audit, tax, legal and insurance costs.

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