Nearly a decade ago, Israeli technology company Nice (TASE: NICE; Nasdaq: NICE) made a deal that astonished the market; it paid $940 million to acquire US company inContact, to accelerate its cloud activity. In time, it became clear that this huge acquisition was one of Nice’s key moves, buying a considerable part of its success. There’s no doubt that it was one of the decisions that turned Barak Eilam from just another CEO into a legend at Nice. Such a legend, that the company’s share price has still not recovered from the tumble it took when he announced that he was stepping down in May last year. Now, it seems that Scott Russell, who replaced Eilam at the beginning of this year, is also betting the farm and trying leave a mark.
Yesterday, Nice announced its biggest ever acquisition - $955 million for German company Cognigy, which is meant to accelerate Nice’s incorporation of artificial intelligence into its customer experience solutions (CX AI). Nice’s share price responded with a 2.86% rise in Tel Aviv, and a 4.89% rise by the close of business on Wall Street yesterday. Investors seem to be optimistic about the acquisition.
The acquisition the market was waiting for?
Nice provides customer relations management (CRM) and risk management solutions. One of its main activities is in call center management on the cloud. One of the factors that has weighed on its share price, besides Eilam’s departure, has been the AI revolution. Although Nice itself offers solutions in this area, the fear on the market was of the advent of AI agents that would replace human agents at call centers to which Nice provides systems, which would be liable to harm its business.
The acquired company fits this niche exactly. According to Nice’s announcement, it’s a leader in conversational and agentic AI, enabling enterprises to "accelerate AI adoption in customer experience across the front and back office." Among Cognigy’s customers are prominent European brands such as Mercedes-Benz, Nestlé, Lidl, Henkel, and Lufthansa Group, so that one advantage of the acquisition is expansion of Nice’s presence in the European market.
Oppenheimer & Co. analyst Sergey Vastchenok says of the acquisition, "Nice has been under pressure for a long time because of the market’s fear of the absence of an AI strategy, and competition from AI, along with general weakness in the call center market. In its recent conference calls, Nice has stressed its progress in the AI products it has launched, but it apparently works better when you buy a pure-play AI company."
Vastchenok says that there were expectations of Russell that he would carry out a significant acquisition at Nice. He adds that in many cases when a company makes an acquisition that is not in its core business, that can be good at the strategic level, but on the other hand it can indicate weakness in the core business, and the assessment is already that there is an appreciable slowdown in the growth of Nice’s SaaS business. "It seems that the company is looking for an alternative that will accelerate growth," he says. "This is a very appropriate strategy, because AI is the natural place for Nice to move forward in, but it has to demonstrate how it leverages growth and integrates into its platform."
Using up almost all the cash
Nice announced that it would finance the deal from its own sources. At the end of the first quarter, the company had cash and cash equivalents of over $1.6 billion, versus debt totaling $460 million, giving net cash of $1.15 billion. Vastchenok points out that in fact Nice is using almost all of its cash for the acquisition of Cognigy. The deal includes conditional consideration of $50 million, of which half will be in cash and half in the form of 158,000 Nice shares. The deal is due to be completed in the fourth quarter of this year, subject to the receipt of regulatory approvals.
Published by Globes, Israel business news - en.globes.co.il - on July 29, 2025.
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