The deal is designed to increase the range of product offerings and languages offered by Lernout and boost its array of small handheld electronic devices.
"Through our combined efforts we will be able to offer various text-to-speech solutions, from low end to high end, for various horizontal and vertical markets," said Gaston Bastiaens, Lernout president.
Berkeley Speech is a supplier of text-to-speech technologies called BeSTspeech. And like Lernout, BST focuses on text-to-speech solutions for computer, telecommunications, consumer, and automotive markets. (See related story)
The acquisition marks the first since Lernout completed its private placement of $50 million in convertible subordinated notes. Lernout had said it planned to use the proceeds to make acquisitions that would strengthen its market share in speech technologies and translation services.
With its acquisition of BTS, the company inherited an operation that posted annual revenues of $5 million and had an operating profit of about 40 percent.
Lernout absorbed BTS's employees and its founders, Michael O'Malley and Elisabeth Peters, are working as consultants for Lernout.
In the third quarter, Lernout's revenues more than tripled to $7.25 million, up from $2 million a year ago. The company also reported net profits of $1.64 million for the quarter, an improvement over its net loss of $2.58 million a year ago.