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Microsoft-Nuance Deal Could Be Killed By European Regulators

EC's competition bureau is querying Nuance’s customers and competitors to get their take on the takeover.
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The European Commission is reportedly taking a deep dive into Microsoft's  (MSFT) - Get Free Report proposed $16 billion takeover of Australian transcription technology company Nuance Communications  (NUAN) - Get Free Report, Reuters reported.

The EC’s competition bureau is querying Nuance’s customers and competitors to see what they think, according to the Reuters story.

That’s the most extensive probing by an antitrust regulator since the companies revealed the deal in April, a knowledgeable source told Reuters.

Microsoft and Nuance declined to respond to Reuters’ request for comment.

The U.S. Has Approved the Deal

The U.S. Justice Department and the Australian Competition Commission already approved the deal. The EC competition bureau has until Dec. 21 to clear the deal or launch a wider query.

Nuance’s business centers on healthcare transcription technology. Its stock has climbed 21% year to date. Microsoft stock has jumped 47% year to date. That compares to an 18% increase for the Nasdaq Composite.

A Good Deal for Microsoft

Morningstar analyst Dan Romanoff is bullish on the software juggernaut and assigns it a wide moat.

“We see [Microsoft’s latest quarterly] results as reinforcing our thesis centering on the proliferation of hybrid cloud environments and Azure,” he wrote in an October commentary.

“The firm continues to use its on-premises dominance to allow customers to move to the cloud easily and at their own pace,” he said. And that’s “a trend we believe will continue over the next five years.

“Quarterly strength and good guidance drive our fair value estimate to $345 from $325 per share, and we continue to see upside to this high-quality name.”