Activist investor Carl Icahn grabbed two seats on the board of Nuance Communication Inc. of Burlington, giving the Wall Street brawler even more sway over the speech recognition giant.
In an agreement with Nuance, Icahn will place his son Brett Icahn and David Schechter, a senior analyst at his investment firm, on its board in exchange for not blocking appointments of the company’s other directors or increasing his stake in Nuance to more than 20 percent before its next annual meeting, in 2014.
Icahn has used large positions in a company’s stock to pressure management to make changes to improve performance or share price. He was able to install three directors on the board of Biogen Idec Inc. of Weston beginning in 2009, and the biotech giant subsequently underwent a significant overhaul.
Icahn began buying Nuance stock in April. His stake is now up to 16.7 percent, making him the company’s single largest shareholder.
Nuance is the maker of Dragon NaturallySpeaking software and the voice recognition technology behind Apple Inc.’s Siri. Despite the growing use of speech technology in everyday computer applications and smartphones, Nuance’s stock has taken a nose dive over the past year, down 25 percent while the overall market is up. Its shares closed Tuesday at $18.13, down about 2 percent from the previous day.
The deal between Nuance and Icahn may buy the Burlington company some time. So far, Icahn has made mildly upbeat statements about Nuance, but with two members of his team inside the boardroom, he is expected to press the company to make changes, according to Daniel Ives, an analyst at FBR Capital Markets and Co.
“It’s going to put a lot more heat in the kitchen,” said Ives, who noted that the numerous acquisitions of other technology companies Nuance has made in recent years have not all resulted in success stories.
On his Twitter account Tuesday, Icahn said he was “Happy to have reached an agreement with Nuance Communications,” over the board seats, and said he was “optimistic their impact” will result in a higher stock down the road.
So far, there have not been public fireworks between Icahn and Nuance chief executive officer Paul Ricci, himself known for tough corporate tactics.
“We are pleased to welcome Brett and David to our Board of Directors and look forward to their contributions,” said Ricci, in a prepared statement. “Over the past few quarters, we have made significant progress in our efforts to deliver enhanced stockholder value, and we remain enthusiastic about Nuance’s long-term prospects.”
Nuance declined to comment further on the deal with Icahn.