In a merger of rival speech software makers, ScanSoft is buying Nuance Communications
for $221 million in stock.
The combined company will have a broad portfolio of speech applications for call center and directory assistance services.
“[The deal] creates a trusted provider of industry-defining technologies and applications,” Paul Ricci, chairman CEO of Peabody, Mass.-based ScanSoft, said in a statement.
Ricci will be the chairman and CEO of the merged company and two of Nuance’s board members, including Chuck Berger, president and CEO of Nuance, will join the ScanSoft board of directors.
“Paul and I agreed that by combining our companies, we will be in the best position to advance the emerging speech industry into stronger growth and maturity and provide superior financial results for shareholders,” Berger said in a statement.
The combined company will be known as Nuance, which has good name
recognition in the industry, the companies said.
ScanSoft expects combined revenue of $315 million in fiscal 2006 as well as synergies of between $25 million and $30 million per year through layoffs, office consolidations and cutting duplicate operating expenses.
At the end of the first quarter, ScanSoft had approximately 900 employees and Nuance 290. The companies have not announced cuts in personnel or offices.
Directors at both companies have signed off on the merger, which now has to be agreed to by shareholders. ScanSoft and Nuance, which is based in Menlo Park, Calif., expect the deal to close in September.
In a related announcement, ScanSoft said that private equity firm Warburg Pincus has purchased $75 million of ScanSoft common stock. The proceeds from the sale will help fund the Nuance acquisition as well as be used for other corporate purposes.