Microsoft, on an accelerated growth push, is buying speech recognition company Nuance in a deal worth about $16 billion.
Microsoft will pay $56.00 per share cash. That’s a 23% premium to Nuance’s Friday closing price. The companies value the transaction at $19.7 billion, including debt.
Shares of Nuance surge about 23% in Monday premarket trading.
“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” said Satya Nadella, CEO, Microsoft. “AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”
- RELATED COVERAGE: Read the full announcement about the Nuance deal
Microsoft’s acquisition of Nuance comes after the companies formed a partnership in 2019.
The Redmond, Washington, company said that the deal will double its total addressable market in the health care provider industry, bringing its total addressable market in health care to nearly $500 billion.
“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” said Mark Benjamin, CEO, Nuance. “To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable and effective connections to people and care. The path forward is clearly with Microsoft — who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference. At the same time, this combination offers a critical opportunity to deliver meaningful and certain value to our shareholders who have driven and supported us on this journey.”
The transaction is Microsoft’s second largest deal following its $26 billion purchase of LinkedIn in 2016. Last September, it bought for video game maker ZeniMax for $7.5 billion.
Mark Benjamin will continue as Nuance CEO.
The transaction is expected to close this year. It still needs approval from Nuance shareholders.
