Topline

Microsoft has acquired AI and speech recognition company Nuance Communications for $19.7 billion, the tech giant announced Monday, marking its second-largest acquisition ever after the $27 billion purchase of LinkedIn in 2016, and its second major buy in 2021 following the $7.5 billion acquisition of video game maker Zenimax.

Key Facts

The all cash transaction of $19.7 billion at $56 per share is more than 23% higher than Nuance’s last closing stock price of $45.22.

In a statement announcing the acquisition, Microsoft said the acquisition will build upon its exisiting partnership with Nuance in the healthcare space and integrate the firm’s products into its ‘Microsoft Cloud for Healthcare’ platform.

Nuance develops and sells tools that recognize and transcribe conversations between doctors and patients and then integrates them into electronic health records.

Apart from healthcare, Microsoft said it also plans to leverage Nuance’s AI expertise to improve its various cloud offerings.

Big Number

77%. That’s the percentage of U.S. hospitals that currently use Nuance’s products Microsoft said in its statement. Additionally more than 55% of physicians and 75% of radiologists also used the company’s solutions.

Key Background

The purchase of Nuance comes amid a spree of acquisitions that Microsoft has either attempted or completed in the past year. Last month, the tech giant completed the acquisition of video-game publisher Zenimax Media in a $7.5 billion cash deal. Microsoft is also reportedly in talks to acquire Discord—a voice chat and instant messaging platform popular with gamers—for more than $10 billion. The attempted purchase of Discord is seen as an attempt by the company to gain a foothold in the social media space after its attempt to buy TikTok’s U.S. operations stalled last year. In 2019, Microsoft had announced a collaboration with with Nuance to deliver its speech recognition platforms to physicians and hospitals.

Further Reading

Microsoft to Buy Nuance for $19.7 Billion in Health-Care Bet (Bloomberg)

Microsoft buys Nuance Communications (CNBC)