US-based multinational technology company Microsoft plans to buy artificial intelligence (AI) and speech technology firm Nuance Communications, known for helping Apple to develop its virtual assistant ‘Siri’, for about $16 billion.
The acquisition builds on a partnership the companies formed in 2019 to automate clinical administrative work like documentation. This deal reveals Microsoft’s ambition to secure its leadership into the healthcare sector where digital transformation got accelerated last year.
During the pandemic-driven lockdown, ‘telehealth’ and remote doctor visits have boomed across the globe and healthcare providers have invested more in technology to improve productivity and digital health services.
“This acquisition brings our technology directly into the physician and patient loop, which is central to all healthcare delivery. The acquisition will also expand our leadership in cross-industry enterprise AI and biometric security,” Microsoft CEO Satya Nadella said.
Microsoft has offered $56 per share to bring the firm under its ownership and the price is 22.86 percent higher than Nuance’s closing price of last week. The shares gained 16 percent to close at $52.85 last day.
Nuance, known as a speech recognition pioneer, now focuses more on healthcare and enterprise AI after spinning off and selling a number of less profitable business units. According to the company, nearly 77 percent of US hospitals already rely on its intelligent solutions including clinical speech recognition, medical transcription and medical imaging.
With operations in 28 countries, the US-based company reported $1.5 billion in revenue in the fiscal year 2020, with two-thirds of it coming from healthcare. Even after the acquisition, Mark Benjamin will continue as the CEO of Nuance and will report to Scott Guthrie, executive vice president of Cloud & AI at Microsoft, the company said.
The deal follows Microsoft’s recent $7.5 billion purchase of gaming company ZeniMax Media. Once completed, the acquisition of Nuance would be Microsoft’s second-biggest, after its $26.2 billion deal of LinkedIn in 2016.