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Microsoft looks to buy Siri developer Nuance

Microsoft Corp. is making a massive bet on health-care artificial intelligence.

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The software giant is set to buy Nuance Communications Inc., tapping the company tied to the Siri voice technology to overhaul solutions that free doctors from note-taking and better predict a patient’s needs. Microsoft may announce the deal as soon as Monday if talks are successful, according to people familiar with the matter.

Massachusetts-based Nuance, with a market cap just shy of $13 billion, is the developer of the Dragon Naturally Speaking family of voice technology products. Its speech recognition engine is the basis for Apple’s voice assistant Siri as well as dozens of other real world applications with enterprise clients.

Nuance and Microsoft began to collaborate in 2019 on medical applications such as automatic note-taking during doctors’ visits.

The price being discussed could value Nuance at about $56 a share, a 23% premium to Friday’s close, said one of the people, who asked not to be identified because the information is private. Set to be Microsoft’s largest acquisition since LinkedIn Corp., the purchase would give Nuance an equity value of about $16 billion, data compiled by Bloomberg show.
Microsoft declined to comment to Bloomberg. Insider reached out to both firms for comment but they couldn’t be reached before publication.

The take-private deal would be Microsoft’s second-largest purchase ever after the company acquired LinkedIn in 2016 for $24 billion. The company has also acquired companies like Skype and GitHub.

Microsoft appears to be in an acquisitive mood. The company has been reported to be in deal talks with online-chat company Discord for over $10 billion. It also purchased game studio ZeniMax Media, the company behind video-game classics “Fallout,” “Doom,” and “The Elder Scrolls” for $7.5 billion in a deal that closed this year.

Microsoft failed to win a bid to acquire TikTok last year.

According to analyst Dan Ives at Wedbush Securities, Microsoft and Nuance Communications are two of the top three tech buys heading into first-quarter earnings season. Ives highlighted Nuance’s “hospital-wide deployments” of its technology, with has created a growing revenue stream. Wedbush set a $65 price target, above Microsoft’s reported bid.

Microsoft stock is up 15.4% from the end of the year at end of closing Friday.

Microsoft entered the artificial intelligence space decades ago with research projects and an early focus by co-founder Bill Gates on finding ways to make it easier for people to speak to computers using plain English.

The Nuance purchase will complement efforts in recent years, where Microsoft has assigned thousands of employees to its AI work and released tools customers can use to build applications that understand and translate speech, recognize images and detect anomalies. The company views AI as a key driver of future sales of cloud services.

The acquisition may also give Microsoft a boost as it faces fierce competition in the AI space with rivals such as Alphabet Inc.’s Google and Amazon.com Inc. also investing heavily in the field.

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