Microsoft Corp is in advanced talks to buy artificial intelligence and speech technology company Nuance Communications Inc according to people familiar with the matter.
An agreement could be announced as soon as this week, said the people, who asked not to be identified because the information is private. The price being discussed could value Nuance at about $56 (€47.14) a share, though the terms could still change, one of the people said.
That would value the equity of Nuance, which laid the groundwork for the technology used in Apple Inc.’s Siri voice software, at about $16 billion, according to data compiled by Bloomberg. The price would be a 23 per cent premium to Friday’s close for Nuance.
Talks are ongoing and the discussions could still fall apart, the people said.
A representative for Microsoft declined to comment. A spokesperson for Nuance, based in Burlington, Massachusetts, didn’t immediately respond to a request for comment.
Nuance’s shares have climbed 3.4 per cent this year, giving the company an almost $13 billion market value but still trailing the 9.9 per cent jump in the SandP 500 Index. Microsoft has climbed 15 per cent.
Microsoft and Nuance have collaborated since 2019 on technologies to do things like allow doctors to capture voice conversations from patient visits and enter the data into electronic medical records.
“This can really help Microsoft accelerate the digitization of the health-care industry, which has lagged other sectors such as retail and banking,” said Anurag Rana, a Bloomberg Intelligence senior analyst. “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.”
Nuance, whose products include Dragon speech-recognition software, had net income of $91 million on revenue of $1.48 billion for its fiscal year ending September 30th,, after losing $217 million the previous year.
Microsoft, with a market value of $1.93 trillion, remains active on the deals front.
Last month, Bloomberg News reported that the software giant was in talks to acquire Discord Inc., a video-game chat community, for more than $10 billion. It also bought video-game maker Zenimax Media Inc. for $7.5 billion in cash in a deal that closed this year.
A deal for Nuance would rank as Microsoft’s second-largest acquisition, behind only the $24 billion LinkedIn Corp. transaction in 2016, according to data compiled by Bloomberg.
Microsoft entered the artificial intelligence space decades ago with research projects and an early focus by co-founder Bill Gates on finding ways to make it easier for people to speak to computers using plain English.
In recent years, the company has assigned thousands of employees to its artificial intelligence work and released tools customers can use to build applications that understand and translate speech, recognize images and detect anomalies. The company views AI as a key driver of future sales of cloud services.