January 15th, 2009
Nuance lands IBM partnership; $175 million capital infusion
Nuance Communications, which makes speech recognition software for companies, consumers and telecom carriers, said Thursday that it has inked a 
licensing and technology pact with IBM. Separately, Warburg Pincus bought $175 million worth of Nuance stock.
Under the IBM deal, Nuance and IBM will collaborate on speech technology. The first products integrating the technologies from both parties will be available “within two years.” Nuance will also buy IBM’s speech-related patents.
Nuance’s best known product is Dragon Naturally Speaking, but it also has a full line of products such as RealSpeak, which converts text to speech, Voice Control, which allows mobile devices to handle voice commands, and call center applications.
Financial details weren’t disclosed.
On another front, Warburg Pincus, a private equity firm, said it has acquired 17.4 million shares of Nuance common stock at a price of $10.06 a share, up from Wednesday’s closing price of $9.18. Nuance will use the proceeds for mergers and acquisitions.
Warburg Pincus will also have a warrant to buy 3.86 million Nuance shares at an exercise price of $11.57. Warburg Pincus won’t sell Nuance shares for six months after the deal closes in February.
While Nuance is looking to go shopping it’s IBM partnership may be more of a precursor down the line. IBM could very well be partnering with Nuance before buying it.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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