NEW YORK (NewsNation Now) — Microsoft said on Monday it would buy artificial intelligence and speech technology firm Nuance Communications Inc for about $16 billion in cash, as it builds out its cloud strategy for healthcare.
The deal comes as both companies, which partnered in 2019 to automate clinical administrative work such as documentation, gain from a boom in telehealth services with medical consultations shifting online due to the COVID-19 pandemic.
“Nuance provides the AI layer at the healthcare point of delivery,” Microsoft CEO Satya Nadella said in a statement, adding “AI is technology’s most important priority, and healthcare is its most urgent application.”
Microsoft’s offer of $56 per share represents a premium of 22.86% to Nuance’s last close. Shares of Nuance rose 16.7% in early trading session on Monday.
Nuance, known for helping launch Apple’s assistant Siri, has been doubling down on providing intelligent solutions in the healthcare sector, including clinical speech recognition, medical transcription and medical imaging solutions.
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With operations in 28 countries, the Burlington, Massachusetts-based company reported $1.5 billion in revenue in fiscal year 2020.
Mark Benjamin will remain the chief executive officer of Nuance and will report to Scott Guthrie, executive vice president of Cloud & AI at Microsoft, the company said.
The deal follows Microsoft’s recent $7.5 billion acquisition of gaming company ZeniMax Media, and reports of buyout interests in messaging platform Discord, which also allows live audio events.
A deal for Nuance would be Microsoft’s second biggest, after its $26.2 billion acquisition of LinkedIn in 2016. Including net debt, the all-cash transaction is valued at $19.7 billion.
Goldman Sachs is the financial adviser to Microsoft, while Evercore advised Nuance.
The transaction is expected to close this year. It still needs approval from Nuance shareholders. Nuance had 7,100 employees as of September, more than half of whom were outside the U.S. — including crews that help transcribe and edit recorded speech that the AI technology might not fully understand.
The Associated Press and Reuters contributed to this report.