Product category: Design and Development Software
News Release from: ScanSoft United Kingdom
Edited by the Electronicstalk Editorial Team on 16 November 2004

Acquisitions expand speech capabilities

ScanSoft has made a series of strategic acquisitions that significantly expand its speech capabilities and resources

ScanSoft has made a series of strategic acquisitions that significantly expand the company's speech capabilities and resources and strengthen its position as a leading supplier of speech technologies, applications and services. ScanSoft has signed separate agreements to acquire Phonetic Systems, ART Advanced Recognition Technologies and Rhetorical Systems that on closing will further accelerate its growth and extend its ability to deliver highly valued solutions in three key speech segments - directory assistance, enterprise speech applications and wireless solutions.

ScanSoft is delivering on its strategy for a future where natural, human conversations will be the predominant way that people retrieve information and interact with automated systems.

To achieve this, ScanSoft has recognised that speech applications need to become more dynamic, sound more natural, interact more conversationally, perform tasks on multiple devices and adapt to personal preferences.

These acquisitions are expected provide ScanSoft with an array of technologies, customers, partners and talented employees to help ScanSoft fuel its growth and propel the quality of speech applications throughout the world.

"Today's announcements signal another significant milestone in building the world's preeminent provider of speech applications that deliver value to thousands of companies and grant easy access to information the world over", said Paul Ricci, Chairman and CEO of ScanSoft.

"These strategic acquisitions prepare the company for future growth and newfound opportunities, building on our core competencies and extending our application footprint in high growth markets".

"We are excited to welcome the people of Phonetic Systems, ART and Rhetorical to the ScanSoft organisation and look forward to a prosperous future".

Each acquisition has been approved by the companies' respective boards of directors.

Aggregate fixed consideration for these transactions is approximately $63.2 million plus additional earn-out provisions.

For Phonetic Systems this consideration comprises $35 million in cash, with a payment of $17.5 million due at closing and another payment of $17.5 million due 24 months after closing.

Terms also include the potential for additional cash consideration of up to $35 million in the form of an earn-out and the potential vesting of a warrant to purchase 750,000 shares of common stock.

The earn-out is based on the business achieving maximum performance targets over each of the next three years.

The transaction is expected to close in January 2005.

For ART the transaction is valued at approximately $21.5 million, net of ART's expected closing cash balance of $5 million.

Consideration comprises cash payments of approximately $5 million due at closing, net of the estimated closing cash balance, and $16.5 million due in December 2005.

The transaction is expected to close in January 2005.

Consideration for the Rhetorical transaction is approximately $6.7 million, comprising $4.9 million in cash due at closing and $1.8 million of ScanSoft common stock.

The transaction is expected to close in December 2004.

"Our decision to fund these transactions with cash reflects a growing confidence in the strength of our own business and a commitment to our shareholders to minimise dilution", Ricci added.

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