Monday, January 19, 2009

Nuance adds time onto Zi Corp. buyout offer

By Mass High Tech staff

Four months after making its initial acquisition offer, Burlington-based Nuance Communications Inc. has extended its latest offer to purchase all of the outstanding common shares of Canada’s Zi Corp. to 5 p.m. (Calgary time) on Jan. 30.

The offer, which was previously set to expire on Jan. 16, would have Nuance (Nasdaq: NUAN) pay shareholders of mobile software maker Zi (Nasdaq: ZICA) 40 cents per common share, making the offer worth around $20 million.

The offer represents a 25 percent premium over Zi’s closing price of stock on Aug. 13, when Zi announced Nuance’s first acquisition offer. That original offer, a cash tender proposal of $40.4 million or 80 cents per share, represented a 150 percent premium over the Aug. 13 closing stock price.

The two companies share a history of contentious entanglement. After Zi rejected Nuance’s initial offer in August, Nuance followed up with a lawsuit accusing Zi of infringing Nuance patents with the Canadian company's Qix and eZiText products. 

Last week Nuance raised $175 million through the sale of common stock to private equity firm Warburg Pincus LLC, with the funds going to general corporate purposes and possible merger and acquisition activity. In a separate deal last week, Nuance reports that it has entered into a joint licensing and services deal with IBM Corp. to incorporate IBM technology into Nuance’s speech products. No financial details of that deal were disclosed.

Burlington-based Nuance was founded in 1992 as Visioneer Inc. and provides speech and imaging solutions for businesses and consumers, including the Dragon Naturally Speaking voice recognition software application. Nuance reported a net loss for fiscal 2008 of $30 million on revenue of $868 million.


 

An earlier online version of this article incorrectly characterized the legal dispute between Nuance and Zi. In August, Nuance sued Zi, alleging patent infringement.