Microsoft Corp. on Monday announced that the company will soon buy Nuance Communications, a speech recognition company for $16 billion. This happens to be the company’s second-largest deal since the 2016 LinkedIn acquisition worth more than $26 billion.
This acquisition indicates the company’s hunt for enhanced growth through these latest deals. Nuance’s shares boomed up to a 23 percent premium on Monday in the premarket trading, marking the same that Microsoft wants to pay. Microsoft’s shares were slightly into the negative margin then. The trading was paused after the rise and is expected to resume at 9 AM ET.
Nuance, founded in 1992, is an AI-based communications company selling tools for transcribing and detecting the speeches in voicemails, doctors’ visits to the clinics, and customer services calls. The company will be aligned with Microsoft’s services focusing on government and business sectors.
The technology from Nuance will serve in augmenting cloud products from Microsoft for healthcare, as per a statement released by Microsoft. It launched these products last year. With $7 million net income from $346 million in revenue in 2020’s Q4, the company’s annual revenue dropped by nearly 4%. Nuance had nearly 7,100 employees as of September 2020.
As per Microsoft’s statement, Mr. Mark Benjamin, the chief executive officer of Nuance will remain in service but will report to Microsoft’s executive in charge of artificial intelligence and cloud businesses, Scott Guthrie.
Nuance has a significant reputation for its technology based on voice recognition for which the company was considered as a target for acquisition by tech giants like Microsoft, Apple, and others for years together. Microsoft already incorporated voice recognition features as a built-in into many of the company’s products featuring Cortana, Microsoft’s voice assistant. But some of them were recently shut down.
Satya Nadella, CEO for Microsoft emphasized Nuance’s tools for healthcare as the crux behind its acquisition. “We’ve seen a massive acceleration of digital transformation…health care in particular,” Nadella said. “When you think about the provider market…digital tech is going to be the key,” Mr. Nadella said in an interview with CNBC.
Reports suggest that Microsoft is in talks to acquire Discord, a chatting application for nearly $10 billion. The company bought Zenimax, a gaming company for $7.6 billion last month. Microsoft tried to get hold of Tik Tok’s US business last year for nearly $30 million. However, the deal was later derailed.