Nuance Communications Agrees to Buyback From Icahn

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Nuance Communications Inc. (NASDAQ: NUAN) was down in Thursday’s regular trading session following news of a share repurchase plan. The company announced that it has agreed to repurchase $500 million, or roughly 26.32 million shares, of Nuance common stock from Carl Icahn and some of his affiliates.

Nuance agreed to repurchase the stock at a price of $19.00 per share, a discount of 6% to the stock’s closing price of $20.21 on March 9.

Although the repurchase of $500 million of any stock is sizable, it is still less than 10% of Nuance’s market cap, which comes in at about $6 billion.

This transaction is expected to reduce Nuance’s projected fiscal 2016 weighted average shares outstanding by roughly 14.3 million shares and is separate from the previously authorized share repurchase program.
Nuance will fund the transaction through a combination of $375 million cash on hand and a 90-day promissory note with a face amount of $125 million. Nuance expects to close the transaction on or around March 15.

Nuance is a provider of voice and language solutions for businesses and consumers around the world. It operates through four segments: Healthcare, Mobile and Consumer, Enterprise, and Imaging.

So far in 2016, Nuance has been relatively flat, with the stock up only 1.6% year to date. Over the past year, the stock is up 44%.

Shares of Nuance were trading down 1.7% at $19.85, with a consensus analyst price target of $22.78 and a 52-week trading range of $13.73 to $21.83.