Microsoft CEO Satya Nadella watches a panel session on day three of the World Economic Forum in Davos, Switzerland, on January 24, 2019.
Jason Alden | Bloomberg | Getty Images
Microsoft announced on Monday that the speech recognition company will buy Nuance Communications for $ 56 a share, about 23% above Friday’s closing price. The deal is worth approximately $ 16 billion.
It is the latest sign that Microsoft is on the hunt for more growth through acquisitions. The company is also reportedly in talks to purchase Discord chat app for approximately $ 10 billion. In addition, Microsoft made an effort to buy TikTok’s US company for about $ 30 billion last year before the deal went off the rails.
The Nuance acquisition is Microsoft’s largest acquisition since it bought LinkedIn for more than $ 26 billion in 2016. Last month, Microsoft completed the acquisition of gaming company Zenimax for $ 7.6 billion. Shares of Nuance were up nearly 23% during Monday’s premarket trading, representing roughly the same premium that Microsoft plans to pay based on Friday’s closing price. Trading on the stock was halted after that pop, and trading is expected to resume around 9am ET. Microsoft shares were slightly negative.
Nuance would be aligned with the part of Microsoft’s operations that serves businesses and governments. Nuance generates revenue by selling tools for recognizing and transcribing speech during doctor visits, customer service calls, and voicemails. In Monday’s announcement, Microsoft said Nuance’s technology will be used to expand Microsoft’s cloud healthcare products launched last year.
The company reported $ 7 million in net profit on approximately $ 346 million in revenue in the fourth quarter of 2020, with revenue declining 4% year-over-year. Founded in 1992, Nuance had 7,100 employees as of September 2020.
Microsoft said Mark Benjamin, CEO of Nuance, will remain with the company and report to Scott Guthrie, the Microsoft executive responsible for the company’s cloud and artificial intelligence operations.
Nuance has a strong reputation for speech recognition technology and has been considered a takeover target for companies like Apple, Microsoft and more for years. Microsoft has already built speech recognition into many of its products, but recently discontinued some products with its voice assistant Cortana.
This story evolves.
–CNBC’s Alex Sherman and Jordan Novet contributed to this report.