Nuance Communications (NUAN) - Get Report agreed to a $20 billion takeover from Microsoft (MSFT) - Get Report Monday that marks the tech giant's second-largest deal on record as it moves deeper into the healthcare sector.
Microsoft will pay $56 a share for Nuance, a 23% premium to its Friday closing price, in an all-cash deal that values the Burlington, Mass.-based innovator of AI-powered voice technology at around $19.7 billion, including around $1 billion in Nuance debt.
Mark Benjamin will remain CEO of Nuance, the companies said, and the deal is expected to close before the end of the year. Once completed, the takeover would be Microsoft's second-largest deal on record, following on from its $26 billion deal for Linkedin in 2016.
Microsoft said it sees the takeover as adding to its overall earnings starting from 2023.
"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," said CEO Satya Nadella. "AI is technology's most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud in Healthcare and Nuance."
The pair formed a strategic partnership in October 2019 to accelerate so-called ambient clinical intelligence, or ACI, technologies that uses AI to listen to doctor-patient conversations and automatically record them into electronic health record (EHR) systems.
- Microsoft, Nuance, Alibaba and Matsuyama - 5 Things You Must Know Monday
- Dow Futures Ease Ahead of Bank Earnings, Inflation Data and Bond Sales
Nuance Communications shares were marked 16.3% higher in early trading immediately following confirmation of the deal to change hands at $53.00 each. Microsoft shares, meanwhile, slipped 0.1% lower $255.63 each.
"The path forward is clearly with Microsoft — who brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference," said Benjamin. "At the same time, this combination offers a critical opportunity to deliver meaningful and certain value to our shareholders who have driven and supported us on this journey."