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Why is Nuance acquiring BeVocal? |
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The acquisition of BeVocal expands Nuance's existing product portfolio with a unique solution set for mobile customer lifecycle management and a range of premium services for the mobile consumer. BeVocal's targeted solution addresses the specific challenges faced by those servicing the large and growing wireless customer base, including increasing average revenue per user (ARPU), reducing cash cost per user (CCPU), reducing cost per gross addition (CPGA) and increasing customer satisfaction. The ability to deliver complete solutions for targeted industries eliminates the complexity of deploying custom solutions and creates new opportunities for Nuance to expand the adoption of its speech solutions in specific markets.
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Who is BeVocal? |
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BeVocal was founded in 1999 in Mountain View, CA. BeVocal provides businesses with an on-demand self-service solution that enables people everywhere to seamlessly get help, make purchases and save time. The Company is focused on helping clients make the most of every self-service customer contact so they can reduce customer care costs, increase revenues, and raise customer satisfaction. Delivering a rich suite of integrated Voice, Web, and mobile data applications, BeVocal provides the only complete self-service solution for the total customer lifecycle. Customers include: Cingular, MetroPCS, VirginMobile and others.
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What are the opportunities for the combined company? |
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The combined company will be in a strengthened position to deliver the leading set of speech-based customer care solutions for the mobile market on a worldwide basis. New high value offers will be made possible by combining and leveraging the companies' existing products and capabilities. Also, through BeVocal's developers program, BeVocal Café, and Nuance's market reach, there is the opportunity to enable and drive additional, partner-based speech solutions to market.
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How does this announcement fit into the companies' growth objectives? |
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Core to both companies' growth strategies is expanding the use and value of speech-based solutions. The transaction brings together a diverse set of applications, experience, customers, partners and resources that will better enable the combined company to do just that.
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What are the terms of the transaction? |
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Under the terms of the agreement, total consideration is approximately $140 million, net of BeVocal's cash and using the February 21, 2007 closing price of Nuance stock at $14.98 per share. The consideration comprises approximately 8.3 million shares of Nuance common stock and a net cash payment of approximately $15 million, due at closing. Terms also include the potential for additional cash consideration of up to $60 million in the form of an earn-out, payable 18-months after closing and based on the business achieving performance targets.
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When is the transaction expected to close? |
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The acquisition has been approved by both companies' Boards of Directors and is expected to close by March 31, 2007, subject to regulatory approvals and customary conditions.
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How does the acquisition affect Nuance's financial outlook? |
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Nuance expects the acquisition to add between $21 million and $23 million in revenue in fiscal year 2007 and between $65 million and $70 million in fiscal year 2008. The acquisition is expected to be approximately neutral to earnings on a GAAP basis in fiscal year 2007 and $0.01 accretive per share in fiscal year 2008. On a non-GAAP basis, the acquisition is expected to be accretive to earnings, excluding amortization, stock-based compensation and non-cash taxes, by approximately $0.00 to $0.01 per share in fiscal year 2007 and $0.05 to $0.06 cents per share in fiscal year 2008.
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What benefits and synergies can Nuance and BeVocal expect from the transaction? |
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The combination of Nuance and BeVocal promises to build the combined company's presence in the mobile market. From a sales and marketing perspective, the solutions introduced by BeVocal will enjoy an extended reach globally as well as benefit from the scale of the sales and marketing organization of Nuance. Key strategic customer and partner relationships established independently will combine for a deeper presence within leading companies serving the mobile market. Both companies have strong professional services organizations, which will allow for greater leverage to meet customer needs. And from a technology perspective, the companies bring complementary skill sets for core technology and application development.
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Will Nuance continue to look for additional M&A opportunities? |
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Yes, Nuance will continue to pursue opportunities that provide operational and strategic benefits.
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How will the integration process of the two companies be managed? |
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The integration will be managed through an integration team that will include executives and employees from both companies in a variety of operational areas.
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How many employees does BeVocal have? Nuance? |
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As of December 31, 2006, BeVocal had approximately 170 full-time employees and contractors and Nuance just under 2,000.
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Does Nuance anticipate a reduction in force as a result of this transaction? |
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No layoffs are planned within BeVocal or Nuance. All BeVocal employees will receive offers to join Nuance, as BeVocal's employee base is critical to the success of the ongoing business.
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How will BeVocal be integrated into the Nuance organization? What happens to the BeVocal executive team? |
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BeVocal will be treated as a distinct operating unit within Nuance. BeVocal's executive team will remain with Nuance to continue growing the business they have built. For the vast majority of BeVocal employees, the reporting structure and job duties will remain the same following the close. There will be some instances where certain departmental functions will be integrated into Nuance corporate to achieve greater operational efficiencies. BeVocal management and all employees will be offered positions within Nuance.
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Where is BeVocal located? What will happen to its facilities? Are there plans to consolidate offices in California or Montreal? |
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BeVocal is headquartered in Mountain View, California, with small remote offices across North America. Nuance has a sizable office in Menlo Park, California, not far from BeVocal's headquarters. The company will look into consolidating offices over the coming months, but intends to stay in the same area, where offices are fairly close. As in previous Nuance acquisitions, the integration team, comprising representatives from both companies, will evaluate facilities taking into account the needs of its employees and business.
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Who are some of BeVocal's customers? |
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Significant BeVocal customers include a variety of mobile service providers and related vendors. For BeVocal's specific solutions and applications, customers include:
- Beyond Suite - Cingular, MetroPCS, Asurian
- VoComm - Cingular, Virgin Mobile
- Cafe - CastleRock, JobFlash, Voxify, LiveOps and many others
These customers will continue to be supported as they are today.
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What does BeVocal's Beyond Suite bring to Nuance? |
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BeVocal's comprehensive self-service solutions provide the mobile community with the next-generation of customer care, addressing the entire subscriber lifecycle. Beyond traditional customer service, the solution includes intelligent offer management, demand generation and fulfillment capabilities, and activation applications. BeVocal's targeted solutions approach complements Nuance's continued progression from a core technology provider to a solutions resource. The ability to deliver complete packaged solutions for targeted industries reduces the complexity of deploying custom solutions and creates new opportunities for Nuance to expand the adoption of speech in specific markets.
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Does BeVocal work with partners? |
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BeVocal has established a network of partners, who are also serving the mobile market in areas such as mobile payments, billing & provisioning, mobile marketing and mobile content. Additionally, they have developed an association of developers and partners through BeVocal Café such as Voxify, CastleRock, and LiveOps.
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Does BeVocal have enterprise customers as well as telecommunications clients? |
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BeVocal's Beyond and VoComm solutions focus on the needs of wireless service providers and related vendors serving the mobile market. Through the BeVocal Café developers' program, a number of business partners host enterprise customers on their network. These include Voxify, Job Flash , LiveOps etc. BeVocal has not traditionally targeted the Enterprise space.
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What will happen to the BeVocal name? |
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BeVocal will transition to carrying the Nuance brand as the acquisition is finalized and the companies combine. Where product brands are found to have independent value, however, they will retain their sub-branding (such as Beyond).
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