Potentially the Second-Largest Acquisition for Microsoft
Microsoft and Nuance are in advanced talks that could potentially see the latter become a part of Microsoft and its impressive business portfolio. Talks are centered around a business deal that values the AI company at around $16 billion, based on the price per share of $56. Bloomberg first reported the talks between the two companies on Sunday.
This price per share represents a premium of around 23% compared to the Friday closing price of $45.58. Nuance would represent the second-largest acquisition for Microsoft. Five years ago, the tech company spent $27 billion to buy LinkedIn.
For a fiscal year to end-September last year, Nuance reported a net income of $91 million in sales of $1.48 billion. In Q4, the AI company made a profit of $7 million on sales of $346 million.
Microsoft is looking to further expand its business portfolio, and the addition of the AI company behind the Siri voice technology could be a great addition. Nuance has been focusing on developing AI solutions in the highly competitive health care industry.
The AI company would represent a “trophy” for Microsoft, says prominent Wedbush Analyst Dan Ives.
“Nuance is in the midst of an unprecedented strategic turnaround the last few years under the leadership of CEO Mark Benjamin and we believe the company represents a unique asset on the health-care front for Microsoft,” Ives wrote in a memo on Sunday night.
The two companies have worked for two years on AI software solutions to accelerate the shift to electronic health records, as well as connect the AI speech technology with the Microsoft Teams chat app.
Under the leadership of Mark Benjamin, Nuance spun off the auto AI unit Cerence in order to raise its focus on partnerships with healthcare providers.
“This can really help Microsoft accelerate the digitization of the health-care industry, which has lagged other sectors such as retail and banking. The biggest near-term benefit that I can see is in the area of telehealth, where Nuance transcription product is currently being used with Microsoft Teams,” said Anurag Rana, a Bloomberg Intelligence senior analyst.
In March, it was reported that Microsoft engaged Discord to inspect a possibility of acquiring the video-game chat company in a business deal worth over $10 billion. Apart from talks with Microsoft, Discord has also talked to other companies, and it’s exploring a potential initial public offering (IPO), Bloomberg reported.
In September last year, Microsoft acquired video game company Zenimax for $7.5 billion in cash in a business deal that was completed earlier this year.
Nuance stock price erupted over 20% in pre-open Monday to trade near the reported $56 per share price. Shares of Microsoft are nearly unchanged in the pre-market trading session today.
The software business titan Microsoft is reportedly in talks to acquire AI company Nuance for $16 billion.
About the Author
Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.