Microsoft CEO Satya Nadella will appear on January 24, 2019, during a panel meeting on the third day of the World Economic Forum in Davos, Switzerland.
Jason Alden | Bloomberg | Getty Images
Microsoft announced on Monday that it will buy the speech recognition company Nuance Communications for $ 56 per share, about 23% above the closing price on Friday. The deal is worth about $ 16 billion.
This is the latest sign that Microsoft is looking for more growth through acquisitions. The company is also reportedly in talks to buy the chat app Discord for about $ 10 billion. In addition, Microsoft made an effort to buy TikTok’s US business last year for about $ 30 billion before the deal was derailed.
The Nuance acquisition is Microsoft’s largest acquisition since it bought LinkedIn in 2016 for more than $ 26 billion. Last month, Microsoft completed its $ 7.6 billion acquisition of gaming company Zenimax. Shares in Nuance rose 23% in pre-trading on Monday, which is about the same premium that Microsoft plans to pay based on the closing price on Friday. After the pop-up, trading on the stock was halted, and is expected to trade again around 9am ET. Microsoft shares were slightly negative.
Nuance will match the part of Microsoft’s business that serves industries and governments. Nuance earns revenue by selling tools for speech recognition and transcription during doctor visits, customer service calls and voicemail. In its announcement Monday, Microsoft said Nuance’s technology will be used to expand Microsoft’s cloud healthcare products, which were launched last year.
The company reported $ 7 million in net income to approximately $ 346 million in the fourth quarter of 2020, with revenue up 4% year-on-year. Nuance was established in 1992 and had 7100 employees as of September 2020.
Microsoft has said that Mark Benjamin, Nuance’s CEO, will stay with the company and report to Scott Guthrie, Microsoft’s CEO responsible for the company’s cloud and artificial intelligence businesses.
Nuance has a good reputation for its voice recognition technology and has long been considered an acquisition target for companies such as Apple, Microsoft and more. Microsoft has already built speech recognition into many of its products, but recently some products have closed with its voice assistant Cortana.
This story unfolds.
Alex Sherman and CNNBC CNNBC contributed to this report.