Microsoft is in advanced discussions to acquire speech recognition company Nuance

Microsoft is in advanced talks to acquire speech recognition company Nuance Communications, a person familiar with the discussions told CNBC on Sunday. A transaction can be signed as early as Sunday and announced on Monday, the person said.

The plans illustrate Microsoft’s recent efforts to expand through deals. Microsoft considered buying the US business of the video-sharing app TikTok last year, and last month it completed the acquisition of video game maker Zenimax for $ 7.5 billion.

Nuance would better align with the part of Microsoft’s business that serves businesses and governments. Nuance generates revenue by selling tools for recognizing and transcribing speech during doctor visits, customer service calls, and voicemails. The company reported net profit of $ 7 million on approximately $ 346 million in revenues in the fourth quarter, with revenue declining 4% year-over-year. Founded in 1992, Nuance has had 7,100 employees as of September.

Microsoft first approached Nuance in December, the person said, and is willing to pay about $ 56 per share for Nuance, the person said. That would give Nuance equity of approximately $ 16 billion, representing a 23% premium over Friday’s closing price of $ 45.58 per share.

Bloomberg reported earlier on Sunday about Microsoft’s plans to buy Nuance. Microsoft declined to comment. A Nuance representative did not immediately respond to a request for comment.

Nuance would be Microsoft’s second-largest acquisition at $ 16 billion, following LinkedIn’s $ 27 billion purchase in 2016.

By purchasing Nuance, Microsoft’s capabilities in speech software can be expanded. Microsoft already has tools that developers can use to enable applications to convert speech into written words, and it is integrating speech recognition into its own products, such as the Bing search engine and Teams communications app.

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