The merged company will do business under the Nuance brand after the expected close of the transaction in September.
The combined companies will develop speech enabled systems and devices that convert speech into text, and vice versa. The technology is extensively deployed in call centers (automated IVR systems), financial services (customer recognition) and hospitals (medical diction).
The combined revenue of the merged company will be around $315m. ScanSoft expects the transaction to generate between $20-25m per year in savings. Job cuts and office consolidations are expected.
The company will be headed by current ScanSoft CEO Paul Ricci. Chuck Berger, CEO of Menlo Park, California-based Nuance, will now join ScanSoft’s board.
The announcement came on the heels of quarterly losses reported by both firms. ScanSoft narrowed its second quarter loss to $1m while Nuance’s loss widened to $4.6m in its first quarter.
Revenue for Peabody, Massachusetts-based ScanSoft rose 24% to $53.1m for the quarter. Clients include Bank of America, British Airways, Citigroup, GE and Verizon.
Separately private equity firm Warburg Pincus also grabbed a share of ScanSoft, after agreeing to buy $75m of its common stock to be used to help fund the merger with Nuance.
