Software giant Microsoft (MSFT) plans to buy Nuance Communications (NUAN) in an all-cash deal worth $19.7 billion, inclusive of Nuance’s net debt. Microsoft stock inched higher in early trading Monday while Nuance stock rocketed on the news.
Microsoft will pay $56 a share for Nuance in a transaction it expects to close this calendar year. The purchase price is a 23% premium to Nuance’s closing price on Friday. Bloomberg reported Sunday that Microsoft was in advanced talks to buy the artificial intelligence and speech recognition company.
In premarket trading on the stock market today, Microsoft stock rose 0.2%, near 256.28. Nuance stock blasted 19.3% higher, near 54.35.
Wedbush Securities analyst Daniel Ives called the acquisition a strategic “no brainer” move for Microsoft. He rates Microsoft stock and Nuance stock as outperform, or buy.
Nuance Strong In Health-Care Sector
The deal would give Microsoft more heft in the health-care sector, where Nuance has a strong presence, Ives said. The two companies have been partners in the health-care industry since 2019.
Nuance “represents a unique asset on the health-care front,” Ives said in a note to clients. “We also believe Microsoft can further integrate Nuance’s advanced speech technology throughout its consumer and enterprise ecosystem over the coming years to leverage this potential M&A move.”
About 77% of U.S. hospitals use Nuance technology. Physicians use its software to transcribe their spoken notes into patient records. Burlington, Mass.-based Nuance is at the forefront of digitizing the health-care industry.
Microsoft said the acquisition will accelerate its efforts to provide cloud computing services for health-care customers.
“Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft Chief Executive Satya Nadella said in a news release Monday.
Microsoft Stock In Buy Zone
On April 5, Microsoft stock broke out of a flat base at a buy point of 246.23, according to IBD MarketSmith charts. On Friday, Microsoft stock notched a record high of 255.99. It remained in the 5% chase zone of its breakout as of Friday’s close.
Nuance stock was poised to break out of a nine-week consolidation period at a buy point of 51.72 on Monday.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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