Microsoft has advanced talks to buy voice recognition company Nuance

Microsoft is in advanced talks about acquiring speech recognition company Nuance Communications, a person familiar with the discussions told CNBC on Sunday. The person can sign a transaction on Sunday and announce it on Monday.

The plans illustrate Microsoft’s recent efforts to expand through transactions. Microsoft last year considered buying the US operations of video-sharing app TikTok, and last month finalized $ 7.5 billion in video game maker Zenimax.

Nuance will be more in line with the part of Microsoft’s business that serves businesses and governments. Nuance earns revenue by selling tools for speech recognition and transcription during doctor visits, customer service calls and voicemail. The company reported net income of $ 7 million in the fourth quarter on revenue of approximately $ 346 million, with revenue up 4% year-on-year. Nuance was established in 1992 with 7,100 employees as of September.

The person first approached Microsoft with Nuance in December, the person says, and is willing to pay about $ 56 a share for Nuance, the person said. That would give Nuance an equity value of about $ 16 billion, representing a premium of 23% above Friday’s closing price of $ 45.58 per share.

Bloomberg reported earlier Sunday on Microsoft’s plans to buy Nuance. Microsoft declined to comment. A nuance representative did not immediately respond to a request for comment.

At $ 16 billion, Nuance would be Microsoft’s second largest acquisition, following the $ 27 billion acquisition of LinkedIn.

By buying Nuance, Microsoft can expand the ability to expand voice applications. Microsoft already has tools that developers can use to enable applications to transcribe speech into written words, and it includes speech recognition in its own products, such as the Bing search engine and the Teams communication app.

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