ScanSoft Inc said on Monday it had agreed to buy Nuance Communications Inc in a $221 million merger of two of the survivors in the slow-to-develop market for computer speech recognition. Under the cash and stock deal, ScanSoft will issue about 28 million shares of its common stock to Nuance shareholders who will receive 0.77 ScanSoft shares for each Nuance share, as well as $2.20 in cash per share. The deal was valued around $221 million using ScanSoft's closing price of $4.46 on May 6. Nuance shares jumped 55 percent to $4.81 from its closing price on Nasdaq of $3.10 before the deal was announced while ScanSoft stock dropped nearly 12 percent to $4.00 from its closing price on Nasdaq of $4.53.
But while speech automation has been held out as one of the most promising technology frontiers for more than a decade, it has met with only limited success except in structured settings like telephone call centers or medical or legal dictation.
Computers that can simulate nuclear blasts still struggle to differentiate a cacophony of human accents and languages.
ScanSoft, which started out supplying document-scanning software, over the last four years has bought up many of the struggling makers of speech recognition software, including brands like Dragon, SpeechWorks and Lernout & Hauspie.
Nuance is a leading supplier of technology used to run customer call centers. The merger of the companies creates the leading independent supplier of voice automation software used in customer service centers, office dictation and the emerging market for controlling mobile phones via voice commands.
"The most important competition in our market is Microsoft and IBM," ScanSoft Chairman and Chief Executive Paul Ricci said in a phone interview following news of the proposed deal.
The merged company will be known as Nuance, reflecting a desire by ScanSoft to emphasise its speech businesses over the remaining 20 percent to 25 percent based on document-scanning business.
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