Microsoft revealed on Monday it would purchase AI and speech technology company Nuance Communications Inc for around $16 billion, as it increases its solutions for the healthcare industry.
The acquisition comes after the two firms partnered in 2019 to automate administrative work. It shows Microsoft’s goal of extending its push into an industry where digital transformation has not yet picked up. Healthcare companies have invested more into technology to help health services.
“This brings our technology straight into the patient and doctor loop, which is vital to all healthcare delivery. The purchase will also increase our leadership in nationwide enterprise AI and biometric security., Microsoft CEO Satya Nadella told investors on a call.
Microsoft’s offer of $56 a share is a 22.86% premium over Nuance’s end price on Friday. The shares increased by 16% on Monday.
Nuance is known for aiding speech technology and helping to start Apple’s Siri virtual assistant. Once giving voice recognition technologies across industries, the company now specializes on enterprise and healthcare AI after selling a number of less profitable sections of its business.
The company revealed it serves 77% of American hospitals, giving smart solutions including medical transcription, speech recognition and medical imaging.
“Nuance’s position will connect healthcare customers into Microsoft’s Azure Cloud and intelligent services., Forrester analyst J.P. Gownder said Monday.
With a presence in 28 countries, the Massachusetts-based firm had $1.5 billion in revenue in 2020, with two thirds coming from the healthcare industry.
This deal comes after Microsoft’s $7.5 billion purchase of gaming giant ZeniMax Media, and reports that Microsoft was discussing buying messaging platform Discord.
Once done, the deal will be Microsoft’s second-largest purchase, after its $26.2 billion LinkedIn buy in 2016.
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