Microsoft announced on Monday that it would buy Nuance Communications, a provider of artificial intelligence and speech recognition software, for about $ 16 billion as it seeks to expand its healthcare technology services.
With the acquisition of Nuance, a product that includes the Dragon transcription tool, Microsoft hopes to boost its offerings for the fast-growing medical computing industry. Nuance has an established customer base, as well as a wide range of health-related speech and text data, which is often an important part of building new systems.
Microsoft և Nuance have been working together since 2019, but the acquisition signals that Microsoft, based in Redmond, has greater ambitions for Nuance technology. Microsoft has invested heavily in cloud computing industry, including healthcare, finance, and retail.
Microsoft says the acquisition doubles the size of the healthcare market where it competes – nearly $ 500 billion.
The deal is Microsoft’s biggest acquisition since it acquired LinkedIn for $ 26.2 billion in 2015.
“Nuance provides the AI layer at the point of healthcare և is the pioneer of real enterprise AI,” said Satya Nadella, CEO of Microsoft.
When Microsoft buys a company, its executives usually believe that they can do more with technology than the company that buys it. The fact that Nuance has proven itself in the field of healthcare with its technically sophisticated vocabulary means that Microsoft can represent other types of businesses.
“The ability to solve this problem makes it much easier to use other industry terminology,” he said.
Nuance tools are also widely used in the United States, so selling to a global power plant like Microsoft will allow the company to sell much faster internationally. “We saw an opportunity to scale up how we are changing the industry,” said Mark Benjamin, CEO of Nuance, in an interview.
Microsoft’s profitable business means it has money to spend. It ended 2020 with $ 132 billion in cash, and was actively looking for big deals to use that money. In September, it announced a deal to spend $ 7.5 billion on ZeniMax Media, the parent company of gaming studios that create big titles like Doom և Quake.
But other possible achievements were not always removed. Last year, a record offer to buy the viral social network TikTok turned into a political series and collapsed. He also referred to Discord, a live chat community that is mostly used by players, saying that the status of these conversations is uncertain.
Under the terms of the deal, Microsoft will pay $ 56 per share in cash, which is 23% more than the closing price of Nuance on Friday, a total of about $ 16 billion. Including the estimated debt, the deal is estimated by Nuance at about $ 19.7 billion.
Nuance was a pioneer in word recognition. It led the market in the 1990s և 2000s եց based some of its technology on Siri, a talking digital assistant that first appeared on the Apple iPhone in 2011.
Lee Deng, who has been helping Microsoft Word Recognition Research for nearly two decades, said in an e-mail that he urged his executives to buy Nuance in 1999, but Microsoft backed down, saying the price was too high.
Speech recognition changed at sea in 2010 when a team of researchers at Microsoft Research Laboratory outside Seattle built a new speech recognition system using the “in-depth learning” method. This method, which was much more effective than earlier technologies, quickly spread throughout the industry, with companies such as Microsoft, Google, and IBM rising to the forefront.
This is a technology that allows Siri, Google Assistant and other digital assistants to recognize spoken words with almost human-level accuracy. Companies like Microsoft and Google also sell the technology through other cloud computing services.
Following this shift, Nuance transformed its own business by offering speech recognition and other technologies for specific markets, particularly healthcare.
Speaking at an investor conference, Nuance CEO Benjamin, who will remain in the post after taking office, said his company’s healthcare business has grown by 37% over the past year and forecasts further growth. According to Microsoft, Nuance technology is used by more than 55% of physicians in the United States – 75% of radiologists – as well as 77% of hospitals in the country.
“The deal gives Microsoft access to half a million doctors in the world’s largest hospitals,” said Dan Ives, chief executive of equity research at Wedbush Securities.