Microsoft to buy the AI speech-tech company behind Siri for €16.5B; tech giant’s second-largest acquisition

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Redmond tech giant Microsoft has made its second-biggest acquisition after LinkedIn. The tech giant has acquired AI speech-tech company Nuance, in an all-cash transaction valued at $19.7B (approx €16.5B), inclusive of net debt. 

As part of the deal, Microsoft will pay $56 (approx €47) per share for Nuance, a 23 per cent premium over the closing price of Nuance on Friday, April 9. The transaction is expected to be closed this calendar year.

Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft. 

Why does it matter?

This acquisition would get the tech giant deeper into the healthcare industry and hospitals through Nuance’s technology. It’s worth mentioning that acquisition builds on an existing partnership between the two companies formed in 2019 to automate clinical administrative work such as documentation.

By augmenting the Microsoft Cloud for Healthcare with Nuance’s solutions, Microsoft will be better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services.

Further, Microsoft said the acquisition would double its total addressable market (TAM) in the healthcare provider space to nearly $500B (approx €420B). 

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“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” says Satya Nadella, CEO, Microsoft. “AI is technology’s most important priority, 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 the growth of Microsoft Cloud for Healthcare and Nuance.”

Instrumental in powering Siri

Founded by Ronald Croen in 1992, Nuance Communications is a speech technology company that delivers solutions that understand, analyse, and respond to people. Notably, the company’s technology was instrumental in helping to power Apple’s digital assistant Siri.

Soon after, the company started to focus on providing software to the healthcare industry, including software that helps to automate radiology reports and makes it easier for doctors to create patient notes by dictation.

The company’s products include the Dragon Ambient eXperience, Dragon Medical One, and PowerScribe One for radiology reporting, all of which are now built on Microsoft Azure. 

Nuance technology is currently used by more than 55 per cent of physicians and 75 per cent of radiologists in the U.S. and used in 77 per cent of U.S. hospitals. 

Nuance’s Healthcare Cloud revenue experienced 37 per cent YoY growth in Nuance’s fiscal year 2020 (ended September 2020).

“Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions,” says Mark Benjamin, CEO, Nuance. 

“To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable, and effective connections to people and care. The path forward is clearly with Microsoft — who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference. At the same time, this combination offers a critical opportunity to deliver a meaningful and certain value to our shareholders who have driven and supported us on this journey,” he further adds. 

Use cases beyond healthcare

Beyond healthcare, Nuance provides AI expertise and customer engagement solutions across Interactive Voice Response (IVR), virtual assistants, and digital and biometric solutions to companies around the world across all industries. 

This expertise will come together with the breadth and depth of Microsoft’s cloud, including Azure, Teams, and Dynamics 365, to deliver next-generation customer engagement and security solutions.

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