Update: Zi Corp.’s board of directors has declined Nuance’s offer. After consulting with Ridgecrest Capital Partners, the company concluded that “the Nuance proposal does not recognize the full value of Zi.” (Release). Nuance Chairman and CEO Paul Ricci fired back in a statement: “Zi’s refusal to negotiate is perplexing and inappropriate given the compelling premium our proposal represents to Zi’s market price and the liquidity opportunity it will create, especially in light of the disappointing financial performance and cash outlook Zi reported last week.” Ricci said Nuance is committed to pursuing the transaction and while it believes it presented a fair value for the company it welcomes Zi to provide information that pegs Zi’s value any higher. (Release).

Nuance Communications made an unsolicited bid for mobile ad and search firm Zi Corp. in an all-cash deal valued around $40.5 million. Burlington, MA-based Nuance, which makes speech-based technology for customer service, directory assistance and voice-activated commands on wireless devices, sent its proposal to Calgary-based Zi Corp on Thursday. Nuance’s offer of 80 cents per share represents a premium of 150 percent over the company’s closing price the day prior and more than 125 percent over its average closing price for the past 20 trading days. The offer is, however, in line with Zi Corp.’s average closing price for the past 60 trading days, it added in the letter. “With your focused cooperation, we expect to complete and sign a definitive agreement and announce our proposed transaction within five days, and to close the transaction as soon as possible after signing,” Nuance CEO and Chairman Paul Ricci wrote in the letter (pdf) to Zi Chairman George Tai. Nuance said it would offer 65 cents per share if Zi was unwilling to provide the company with due diligence. Zi Corp., which has been pretty quiet on the proposal thus far, said only that “the Board is considering the proposal and does not have any comment with respect to the proposal at this time.”