Nuance Acquires Dictaphone

Dictaphone Corp., a provider of dictation and speech-recognition solutions for the healthcare industry has agreed to an acquisition by Nuance Communications, Inc.

The acquisition of Dictaphone will help expand Nuance’s product portfolio, market reach and revenue streams within the healthcare vertical. Dictaphone, with an installed base of dictation and transcription software systems, serves over 4,000 hospital and outpatient facilities and approximately 400,000 physicians.

With this acquisition, Nuance is expecting to add between $80 million USD and $85 million USD in revenue in the fiscal year 2006 and between $180 million USD and $200 million USD in the fiscal year 2007. The transaction is expected to generate cost synergies between $20 million USD and $25 million USD per year. The acquisition is expected to be dilutive to earnings on a GAAP basis by approximately $.12 to $.11 per share in fiscal year 2006 and $.05 to $.02 per share in fiscal year 2007. On a non-GAAP basis, the acquisition is expected to be credited to earnings, excluding amortization, acquisition-related costs and stock-based compensation, by approximately $.02 to $.03 per share in fiscal year 2006 and $.06 to $.09 per share in fiscal year 2007.

Under the terms of the agreement, consideration for the transaction is $357 million USD in cash, subject to adjustments. Nuance has obtained a commitment for a new senior secured credit facility from UBS Investment Bank, Credit Suisse, Citigroup and Bank of America to finance the transaction. The facility comprises a $355 million USD term loan and a $75 million USD revolving credit facility. Closing of this commitment is subject to customary conditions.

The acquisition has been approved by boards of directors of both the companies and is subject to regulatory approvals and customary conditions. Nuance and Dictaphone were represented by Evercore Partners and UBS Investment Bank, respectively.

Source: Nuance