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Microsoft confirms $20B acquisition of AI and speech recognition company Nuance

The deal for Nuance Communications is Microsoft's second largest ever.

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James Martin/CNET

Microsoft has signed a deal to acquire AI and speech-recognition company Nuance Communications in a deal valued at nearly $20 billion, the tech giant confirmed Monday in blog post. Technology from Burlington, Massachusetts-based Nuance helped Apple's digital assistant, Siri. The deal, which was reported by Bloomberg on Sunday, will help Microsoft deliver "new cloud and AI capabilities across healthcare and other industries," the company said. 

Microsoft said it will acquire Nuance for $56.00 per share, a 23% premium over the stock's close on Friday, in an all-cash transaction valued at $19.7 billion. The deal will be Microsoft's second largest acquisition ever, after its $26.2 billion deal to buy LinkedIn in 2016. Nuance CEO Mark Benjamin will continue in his role, reporting to Microsoft's cloud and AI chief. 

"Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI," said Microsoft CEO Satya Nadella in the blog post Monday. "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."

See also: The best telemedicine services to see a doctor from home

Like many tech companies, Microsoft has invested heavily in artificial intelligence in recent years. Last year, it unveiled an enormous supercomputer for AI work that contained 285,000 processor cores. In 2018, it acquired Xoxco, a startup that develops conversational artificial intelligence, also known as chatbots.

The deal is expected to close later this year. 

CNET's Carrie Mihalcik contributed to this report.