Microsoft to buy AI firm Nuance Communications in $19.7 Billion Deal

Microsoft Corporation said that it would buy artificial intelligence and speech technology firm Nuance Communications Inc. This deal is $19.7 billion, including net debt, as it seeks to bolster its cloud strategy for healthcare.

Due to the pandemic situation there is an increased medical consultation over the online, which boosted the telehealth services. Hence, in 2019 both the companies partnered to automate clinical administrative work such as documentation. The acquisition will combine solutions and expertise to deliver new cloud and AI capabilities across healthcare and other industries, and represent the latest step in Microsoft’s industry-specific cloud strategy, the Redmond-based company noted.

Satya Nadella, Microsoft CEO stated in a statement that Nuance provides the AI layer at the healthcare point of delivery. And also, he added that technology’s most important priority is AI 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,” quoted Nadella.

Microsoft’s offer of $56 per share represents a premium of 22.86% to Nuance’s last close. In pre-market trading shares of Nuance rose nearly 23%.  Apple Inc’s assistant Siri’s launch was helped by Nuance. It also makes software for business including automotive. Beyond healthcare, Nuance also provides AI expertise and customer engagement solutions across Interactive Voice Response, virtual assistants, and digital and biometric solutions.

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. Nuance’s products include multiple clinical speech recognition software as a service (SaaS) offering built on Microsoft Azure. The firm’s solutions work with core healthcare systems, and are currently used in 77% of U.S. hospitals. By the end of this calendar year, this deal is intended to close and it would be Microsoft’s second-largest purchase after its 2016 acquisition of LinkedIn for $26.2 billion.