UPDATE: Microsoft on Monday confirmed it will buy Nuance for $19.7 billion. Nuance CEO Mark Benjamin will retain his position and report to Azure chief Scott Guthrie. The deal is expected to close later this year.
“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft CEO Satya Nadella said in a statement. “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, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”
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Original story: Microsoft is in “advanced talks” to acquire Nuance Communications for $16 billion, according to a report from Bloomberg on Sunday.
Nuance background: The Boston-area publicly traded company specializes in “conversational AI” for applications in healthcare, telecommunications, automotive, financial services, and more. Nuance reported revenue of $345.8 million in the quarter ended Dec. 31, down 4%, and non-GAAP net income of $91.4 million, up slightly year-over-year. The company’s stock has nearly tripled since March 2020 and its market capitalization is $13 billion.
Previous connections: Microsoft has teamed up with Nuance in the past on healthcare-related deals. Nuance also has a large presence in the Seattle region near Microsoft’s HQ as a result of several acquisitions including VoiceBox, Swype, Tweedle, Varolii, and Jott. Nuance in February acquired Saykara, a Seattle health-tech startup that makes a voice assistant for clinicians.
A big deal: At its reported price, the acquisition would be Microsoft’s second-largest to date, behind its $26.2 billion purchase of LinkedIn. It reflects the company’s continued investment in artificial intelligence, speech technology, and healthcare. Microsoft is on the “M&A warpath over the next 12-to-18 months,” according to Dan Ives, an analyst with Wedbush, citing recent reports of Microsoft’s interest in buying Discord and its $7.5 billion acquisition of ZeniMax.
We’ve reached out to Microsoft for comment and will update if we hear back.
