ScanSoft to Buy Rival Nuance for $221M
Monday May 9, 5:53 pm ET
ScanSoft to Acquire Speech Recognition Rival Nuance for $221 Million
PEABODY, Mass. (AP) -- ScanSoft Inc., a maker of speech recognition software, Monday said it has agreed to acquire rival Nuance Communications Inc. for $221 million.
Peabody-based ScanSoft and Menlo Park, Calif.-based Nuance both create software to convert speech into text, and vice versa. The technology is used by call centers for voice-driven menus, by financial services companies to recognize customers, and by doctors for dictation. The combined company's clients will include Bank of America, British Airways, Citigroup, General Electric and Verizon.
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Under the agreement, Nuance shareholders will receive 0.77 shares of ScanSoft common stock plus $2.20 in cash for each Nuance share held. Based on Friday's closing price of $4.46 for ScanSoft shares, the deal values Nuance shares at $5.63 cents, well above the closing price of $3.05 on Friday.
ScanSoft also said that private equity firm Warburg Pincus has decided to buy a total $75 million in ScanSoft stock through two transactions, one of them separate from the acquisition of Nuance and another that is contingent on the deal closing.
Before the companies announced the deal, shares of ScanSoft closed Monday up 7 cents at $4.53 on the Nasdaq Stock Market, near the middle of the stock's 52-week range of $3.25 to $5.55. Nuance shares closed up a nickel at $3.10 on the Nasdaq, near the bottom of a 52-week range of $2.60 to $5.30.
The companies said the transaction is expected to generate $20 million to $25 million per year in savings through job cuts and office consolidations.
If the deal is approved by regulators and shareholders, the combined company will operate under the Nuance name.
The combined company's revenue is expected to exceed $315 million for the next fiscal year, when the companies forecast the deal will begin adding to earnings.
Paul Ricci, ScanSoft's chairman and chief executive, will maintain those positions at the combined company, while Chuck Berger, president and CEO of Nuance, will join the ScanSoft board.
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