Microsoft buys Siri speech recognition partner Nuance in $19.7B deal

Following initial reports over the weekend that talks were underway, Microsoft revealed on Monday that it had in fact reached a deal with Nuance. The deal, which will be for $56 per share, represents a 23% premium on Nuance's closing price from Friday.

While the deal was speculated to give Nuance a valuation in the region of $16 billion, the actual all-cash transaction will be valued at $19.7 billion according to Microsoft, taking into account Nuance's net debt. Existing Nuance CEO Mark Benjamin will stay in his role, and will report to Microsoft's Scott Guthrie, executive vice president of Cloud & AI.

The transaction is expected to close before the end of 2021, pending any regulatory or shareholder clearances. Once completed, it will be Microsoft's second-largest acquisition, following its 2016 purchase of LinkedIn for $24 billion.

Microsoft is still working on other acquisitions, and is believed to be in talks to buy game-centric communications platform Discord. That acquisition is rumored to be valued in excess of $10 billion.

Nuance is best known for its voice recognition systems, which allow computers to interpret speech into text for later processing. The company's technology was a fundamental component of Apple's digital assistant Siri, which Nuance confirmed in 2013, though it is unclear how the relationship between the companies fares years later.

Microsoft's interest in Nuance is framed by the companies as a health-centric one, including Nuance's experience as a "provider of conversational AI and cloud-based ambient clinical intelligence for healthcare providers." This includes working with electronic health records and operating many of its services using Microsoft Azure.

It is claimed that Nuance is being used by more than 55% of physicians and 75% of radiologists in the United States, and 77% of U.S. hospitals.

Microsoft claims it will augment its Cloud for Healthcare offering with Nuance's products to "empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services."

Away from healthcare, Nuance's technology may be incorporated into Microsoft's Azure, Teams, and Dynamics 365 platforms.

"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."

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