Voice-to-text company Spinvox to announce sale to Nuance, source says [confirmed]

[This is confirmed: Spinvox just announced a sale to Nuance in a blog post, and in a press release. The price is $102.5 million, comprising $66 million in cash and $36.5 million in common stock..]

Spinvox, the London company that lets you translate your voice into text messages, could announce its sale today, according to a VentureBeat source close to the company who requested anonymity.

We’ve called Spinvox for official comment. We reached Simon Crowfoot, the company’s strategic business development director, but he said he was unaware of any details, and referred us to the company’s co-founder and chief executive, Christina Domecq, who has not yet responded.

[Update: Here’s what the company says in its statement confirming the acquisition by Nuance: “SpinVox already services nearly 100 million users worldwide. With that in mind, Nuance will leverage SpinVox’s carrier-grade voice-to-text infrastructure, network product portfolio, multi-language support and experienced UK-based development teams to further drive and accelerate adoption of voice-to-text around the world.”]

The rumored sale comes at a time when the company is struggling for survival, and as a chorus of competitors surround it.

Rumors of Spinvox sale first arose earlier this month — when it leaked that the company was in negotiations with the Burlington, Mass., based speech-recognition giant Nuance Communications. Spinvox needs to find some sort of exit of its financial predicament: It owes $47 million (£30 million) in debt to one of its investors, which was due to be paid back earlier this month. The company got a reprieve on that commitment until the end of January, and earlier rumors had suggested the company was trying to announce a sale by Christmas.

In its story two weeks ago, London’s Sunday Times had said the company was looking to sell to Nuance for about $150 million (or £92m). But it’s possible that Nuance has dragged out the talks, in order to push for a lower price. After all, that’s a high price to pay for a company that is still losing money (it reportedly lost about $70 million in 2007, is reportedly projected to make only $10 million (£7 million) in revenue, and has run out of cash reserves. BBC reported that Nuance is interested in Spinvox’s contracts with a international telecoms operators, such as Telefonica in South America and Telstra of Australia.

However, it’s not clear how much negotiating power Spinvox has, considering the proliferation of companies that do very much the same thing as it can. Nuance already has similar technology, having recently bolstered its offerings with the acquisition of another company that does speech-to-text, Jott.

Spinvox also drew criticism when it was revealed that much of its translation relies on humans, not on automated technology, raising questions of its competitive viability. The recent emergence of Google Voice, which offers much the same service, but which does not rely on humans and instead uses technology and machine learning from a huge base of users, poses a significant threat. Then there’s a host of other smaller players, including Simulscribe (which recently struck a big deal with Ditech), Yap (which focuses on mobile) Promptu (which recently released a voice-to-text iPhone app), Vlingo, and reQall.

The six-year-old company also drew negative attention in July, when it asked its staff to take some of its pay in the form of stock options. It still managed to raise $25 million more in cash from investors in August, and also demonstrated its technology at that time to assuage critics that it wasn’t wholly reliant on humans for its translation efforts.

The company has raised about $200 million from investors, which include GLG Partners, Goldman Sachs, BlueMountain and Toscafund Asset Management, Martin Hughes, Carphone Warehouse, ABN Amro, Gartmore and Allen, and several private backers.

In September, the company got hit again with negative publicity, when one of its smaller investors, Invesco, said it was writing down the value of its £759,000 investment in the company by 90 percent, valuing its .71 stake at just £76,000. That effectively values the company at only about £10 million ($15.8 million). Invesco also revealed in its report to shareholders that Spinvox had been put up for sale.

[Our update is here.]