Robotic process automation software provider Kofax Inc. announced recently that it has agreed to buy Nuance Document Imaging, a division of Nuance Communications Inc., for $400 million in cash.
The deal is expected to close in Q1 2019.
The sale enables Nuance to focus entirely on its conversational AI- and cloud-based solutions while simplifying the organization and improving its growth profile. For Kofax, the Document Imaging division bolsters the company’s leadership in Intelligent Automation technologies.
The divestment comes as Nuance, which has a market capitalization of roughly $5 billion, is seeking to focus on its most profitable businesses. Shedding the document imaging business — its smallest business segment in terms of revenue — should help the company focus resources on its more successful product lines.
This is the first major move by Mark Benjamin, who took over as Nuance’s CEO in March. The company is a leader in voice recognition services that served as an early partner to the likes of Apple with Siri, and has also worked on a number of other AI-based solutions to improve how enterprises build services and work.
“Nuance is entering the next phase of our organization’s growth and while selling the Document Imaging division was not an easy decision given its many years of contributions and dedication of our imaging associates, it became clear in our portfolio reviews that this is the right outcome,” said Benjamin. “Selling the Imaging division enables us to sharpen focus on our conversational AI- and cloud-related portfolio and accelerate the transformation well underway at the company.”
Nuance Document Imaging is one of the biggest companies of its kind in the field, covering 6 million knowledge workers and over 100,000 active deployments of its print management solutions. The imaging division generated $217 million in revenue last year and accounted for about 11 percent of its annual revenue. The biggest parts of its business today are healthcare solutions, enterprise and automotive.
The acquisition is a notable move for Kofax as well — itself acquired by Thoma Bravo last year in a $1.5 billion deal — as it continues to build up its business in Robotic Process Automation (RPA). RPA has been one of the fastest-growing areas in IT, fueled by the rising interest in bringing more AI into enterprise services. Kofax CEO Reynolds Bish said the purchase will add key technologies to Kofax’s core product. Workflow magazine has covered Bish’s aggressive acquisition strategies in the past.
“Through the acquisition of Nuance’s document imaging division, Kofax will drive customer value by adding key technologies, including cloud compatibility, scan-to-archive, scan-to-workflow, print management and document security, to our end-to-end Intelligent Automation platform,” said Bish. “In addition, we will now be able to combine the best capture and print management capabilities available in the market into one product portfolio.”
Kofax is acquiring Nuance specifically to bring on more in the area of imaging services, which include services like providing security and compliance around any image scanning or printing that takes place across an organization.
The deal comes as the RPA market continues to see impressive growth. It’s forecast to be worth $3.11 billion by 2025, according to Grand View Research, fueled by startups like UiPath, which raised $225 million in September, and Automation Anywhere, which brought in $250 million in a July funding round.