Microsoft CEO Satya Nadella is watching a panel session on the third day of the World Economic Forum in Davos, Switzerland, on January 24, 2019.
Jason Alden | Bloomberg | Getty Images
Microsoft announced Monday that it will buy speech recognition company Nuance Communications for $ 56 a share, about 23% above its closing price on Friday. The deal is worth about $ 16 billion.
It is the latest sign that Microsoft is looking for more growth through acquisitions. The company is also in talks to buy the Discord chat app for about $ 10 billion. Moreover, Microsoft made an effort to buy TikTok’s US business last year for about $ 30 billion before the business derailed.
The acquisition of Nuance is Microsoft’s largest acquisition since it bought LinkedIn for more than $ 26 billion in 2016. Last month, Microsoft completed its $ 7.6 billion acquisition of gaming company Zenimax. Nuance shares rose nearly 23% in premarket trading on Monday, representing about the same premium that Microsoft plans to pay based on Friday’s closing price. The transaction was stopped on shares after that pop and is expected to resume trading around 9 am ET. Microsoft’s actions were slightly negative.
The nuance would be aligned with the part of the Microsoft business that serves companies and governments. Nuance earns revenue by selling tools for speech recognition and transcription in physician visits, customer service calls, and voice messages. In Monday’s announcement, Microsoft said Nuance technology will be used to enhance Microsoft’s cloud healthcare products, which were launched last year.
The company reported net revenues of $ 7 million with revenues of approximately $ 346 million in the fourth quarter of 2020, with revenues falling 4% annually. Nuance was founded in 1992 and had 7,100 employees in September 2020.
Microsoft has said that Nuance CEO Mark Benjamin will stay with the company and report to Scott Guthrie, Microsoft’s executive in charge of the company’s cloud and artificial intelligence business.
Nuance has a strong reputation for its voice recognition technology and has been considered an acquisition target for companies such as Apple, Microsoft and many others for several years. Microsoft has already incorporated voice recognition into many of its products, but recently closed some products with its Cortana voice assistant.
This story is developing.
– CNBC’s Alex Sherman and Jordan Novet contributed to this report.