Warburg Pincus buys ScanSoft for $80m

The buyout firm is to take the speech and imaging company private, buying all 15.9m shares from current owner Xerox.

Another day, another deal for Warburg Pincus, as the global private equity house announced today the acquisition of speech and imaging technology company ScanSoft from Xerox for approximately $80 million (€64.8 million) in its second deal this week.

 

According to a press statement, Warburg plans to buy all 15.9 million shares of the company, including a warrant from ScanSoft to purchase an additional 2.5 million shares of common stock.

 

Warburg vice chairman William Janeway in the statement said that his firm had followed ScanSoft’s progress for several years before deciding to invest. “We believe that ScanSoft has the vision and resources to extend its position as the leading provider of global speech and imaging solutions.”

 

In the statement, Xerox senior vice president and chief financial officer Lawrence Zimmerman said the decision to sell ScanSoft is part of Xerox’s strategy “to focus investments in areas related to Xerox’s document management core business.” 

 

This decision originated in 2001 when Xerox was deep in debt, stock prices were falling and an accounting scandal broke out. Since then the company has regained its footing and made a successful turnaround under chief executive officer Anne Mulcahy. Zimmerman said Xerox will have no equity stake in ScanSoft, but his company will continue working with ScanSoft as a “business partner and application provider.”

 

Earlier this week, Warburg Pincus, which currently manages approximately $9 billion of capital, teamed up with Bain Capital and Silver Lake Partners in a $2.05 billion agreement to buy UGS PLM Solutions, a division of EDS, the systems services company.  Each firm contributed approximately the same amount to the purchase of the Texas-based firm, which is a ‘product lifecycle management’ software maker.