Nuance plan could fend off Carl Icahn
Burlington firm adopts poison pill as billionaire investor raises his stake
With activist investor Carl Icahn bearing down, Nuance Communications Inc. has deployed a new line of defense that could be used to block the billionaire from strengthening his control over the speech recognition powerhouse.
The Burlington-based company behind Dragon software and Siri on the Apple iPhone enacted a plan Tuesday that would effectively prevent any outside investor from gaining 20 percent ownership of the firm.
The move came 12 days after Icahn, an investor known for forcing changes at underperforming companies, increased his stake in Nuance to 16 percent.
In a statement, Nuance said the implementation of its stockholder rights plan — a tactic often referred to as a poison pill — was not prompted by any individual investor or group. But one analyst said it would throw a wrench into any effort by Icahn to assume control of the firm and force quick changes.
“There’s no hiding the fact that this makes it harder for someone to take over the company,” said Shyam Patil, an executive vice president with Wedbush Securities Inc.
Nuance’s action allows stockholders to buy more shares if one investor acquires a 20 percent stake, thus diluting that individual’s ownership of the company. The move did not come as a surprise. Nuance had hired Goldman Sachs Inc. for advice soon after Icahn purchased a large stake in the firm earlier this year.
Nuance’s shares closed at $19.19 Tuesday, up 13 cents for the day.
In April, Icahn disclosed that he had acquired 9.3 percent of Nuance following a sharp drop in the company’s share price. Last week, he said he had increased his ownership to 16 percent.
Icahn is no stranger in technology stock circles. At the moment, he is locked in a battle over the future of computer giant Dell Inc.
Despite the quick increase in his stake at Nuance, Icahn has not made his intentions for the company clear or made any public demands of its management.
He could not be reached for comment Tuesday.
A spokesman for Nuance said the company would not comment beyond the announcement of its stockholder rights program, which takes effect Aug. 29.
Chief executive Paul Ricci made Nuance the dominant name in speech technology by acquiring competitors and cementing connections with industry giants Apple Inc. and Samsung, while also making inroads into the lucrative health care marketplace.
But the company found itself on shaky ground in the months before Icahn’s arrival. In February, after reporting lower-than-expected earnings and cutting its near-term business forecast, Nuance’s stock took a one-day hammering, falling 19 percent.
Icahn’s interest in the company is just his latest foray in Massachusetts.
Previously, he undertook a prolonged battle for control of Biogen Idec Inc. that eventually led to the replacement of the chief executive and restructuring of the Weston-based company. He was also among a group of investors that pressured another biotech firm, Genzyme Corp. of Cambridge, to sell itself in 2010 for $20.1 billion to French pharmaceutical giant Sanofi SA.