In a $19.7 billion transaction, Microsoft Corp would acquire a tech firm, that helped Apple develop its Siri speech recognition programme. Since its acquisition of networking site LinkedIn in 2016, Microsoft’s acquisition of Nuance Communications is the second largest in its history. Microsoft announced that it would expand its healthcare software and artificial intelligence expertise. After the pandemic, this trend is expected to continue. In a tweet, Microsoft CEO Satya Nadella said that “Nuance offers the AI layer at the healthcare point of delivery.” “The most important priority for technology is AI, and healthcare is its most pressing application.” The deal is expected to close this year, and contains Nuance debt.
Nuance was founded in 1992 in Massachusetts. It hires over 1,600 people and operates in 28 countries around the world. It is best known as a speech recognition pioneer, but it has recently focused on delivering software to the healthcare industry, such as software that helps doctors build patient notes by dictation and automates radiology reports. Mr Nadella claims that Nuance is now used by about 80% of US hospitals. Microsoft’s future market in the health-care sector would be greatly expanded if it buys the business.
Joining forces with Microsoft, according to Nuance executives, would help the company expand its cloud-based services and give it access to Microsoft’s global customer base. The acquisition builds on a 2019 agreement between the two organisations, in order to simplify clinical administrative tasks including documentation. “A strategic no brainer in our view for [Microsoft] and fits like a glove into its healthcare endeavours at a time when hospitals and doctors are adopting next generation AI capabilities from thought,” said Wedbush Securities analyst, Dan Ives.
Microsoft is purchasing Nuance, a speech recognition start-up, for around $16 billion as part of an aggressive growth strategy. Microsoft will pay a cash dividend of $56 per share. This represents a 23% premium over Nuance’s closing price on Friday. The deal, including debt, is valued at $19.7 billion by the firms. In early Monday trading, Nuance, based in Burlington, Massachusetts, saw its stock rise by more than 17%. After forming a relationship in 2019, Microsoft decided to buy Nuance. The transaction would double the company’s overall addressable market in the health-care provider sector, taking it to nearly $500 billion, according to the Redmond, Washington-based company.
Nuance’s clinical speech recognition SaaS offerings include the Dragon Ambient eXperience, Dragon Medical One, and PowerScribe One for radiology reporting, all based on Microsoft Azure. More than 55% of doctors and 75% of radiologists in the United States use the company’s products, as do 77% of hospitals in the United States. Revenue from the health-care cloud increased by 37%. In a tweet, Microsoft CEO Satya Nadella said, “AI is technology’s most critical priority, and healthcare is its most pressing application.” Aside from health care, Nuance offers AI knowledge and customer experience solutions to businesses in all sectors, including integrated voice response, virtual assistants, wireless and biometric solutions.
This will work in tandem with Microsoft’s cloud offerings, such as Azure, Teams, and Dynamics 365, to include next-generation customer experience and security solutions. Following its $26 billion acquisition of LinkedIn in 2016, this is Microsoft’s second-largest offer. It paid $7.5 billion in September for video game developer ZeniMax. In a note to clients, Wedbush analyst Daniel Ives wrote, “This is the right acquisition at the right time with Microsoft doubling down on its health care initiatives in the coming years.” The deal, according to Ives, is a good match for Microsoft’s health-care portfolio and comes at a time when hospitals and doctors are adopting next-generation AI capabilities.
“Clearly, [Microsoft] is on the “offensive” when it comes to M&A, with the company in a strong position to build on its entrenched position in the cloud going forward,” he said, adding that Nuance is “another feather in its cap.” The deal might be completed this year. Nuance shareholders may also approve the deal.
