The big headline news yesterday was Apple's
Amidst the flurry of iPad headlines, Nuance announced that it is acquiring smaller rival Transcend Services
It's an all-cash deal that values Transcend at $29.50 per share, a nearly 41% premium over the prior day's close. Transcend specializes in medical transcription and speech editing services, so it should complement Nuance's own medical offerings.
The acquisition is arguably more important than the Apple/Siri storyline in some ways, since Nuance's overall healthcare segment brings in more dollars than its mobile and consumer segment, even though both grew at roughly the same pace last quarter.
Healthcare revenue grew 23%, to $145.3 million, while mobile and consumer sales increased 24%, to $108.5 million, last quarter. However, mobile relationships are now "more comprehensive and complex" and could have more revenue growth back-loaded through delayed and deferred revenue recognition.
Nuance expects this acquisition to close in the second half of the year, and that it will add between $140 million and $150 million in revenue and be accretive to non-GAAP earnings to the tune of $0.08 and $0.09 per share in fiscal 2013.
The deal also adds to Nuance's list of medical-related acquisitions in recent times, including eScription in 2008 and Webmedx just last year. Beyond healthcare, it acquired text-input specialist Swype and voice-recognition rival Vlingo last year, among others.
There's no mention of taking on debt to finance this purchase, and the company is sitting on about $883.8 million in cash and investments to use. So long as its coffers don't run dry and it doesn't need to resort to debt, I'm perfectly happy as a shareholder with Nuance going about its acquisitive ways.
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Fool contributor Evan Niu has a synthetic long options position in Nuance Communications and owns shares of Apple and Nuance Communications, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio.
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