Friday, February 27, 2009

Nuance buys Zi Corp. for $35M

By Galen Moore

Nuance Communications Inc. (Nasdaq: NUAN) will acquire Zi Corp. (Nasdaq: ZICA) for $35 million in cash and stock, the companies announced late Thursday.

Speech software maker Nuance, based in Burlington, had been trying to acquire Zi Corp. since last August, when the company offered $40.4 million for the Calgary, Alberta-based maker of mobile advertising software.

Negotiations have been contentious. Shortly after Zi rejected its first offer, Nuance filed a lawsuit alleging the Canadian company’s Qix and EziText products infringe two Nuance patents, both entitled “Reduced Keyboard Disambiguating System.” At the time, Zi executives dismissed the lawsuit as a bullying tactic.

Nuance has been on a buying spree. In October, the company acquired Austria-based Philips Speech Recognition Systems for $96.1 million, and SNAPin Software Inc., a mobile device and server self-service technology developer based in Washington State, for $180 million.

Zi Corp.’s share price has been declining steadily since February, 2007, when it reached a recent high of $2.49 a share. Yesterday, Zi shares closed at $0.39 per share. The agreed-upon sale price equals a price of $0.64 per share. Nuance’s original offer was equivalent to $0.80 per share.

The $35 million offer comprises about $17 million in cash and $18 million in Nuance common stock, according to the companies’ press release. Zi shareholders will receive $0.34 in cash and about .04 shares of Nuance stock for every share of Zi common stock they own.

In April, Nuance bought eScription Inc., a Needham-based provider of computer-aided medical transcription technology, for $363 million. The deal won Nuance a 2008 dealmakers award from Mass High Tech and the Association for Corporate Growth Boston.