It’s the latest sign Microsoft is hunting for more growth through acquisitions. The company is also reportedly in talks to buy the chat app Discord for about $10 billion. On top of that, Microsoft made an effort to buy TikTok’s U.S. business last year for about $30 billion before the deal was derailed.
The Nuance acquisition represents Microsoft’s largest acquisition since it bought LinkedIn for more than $26 billion in 2016. Last month, Microsoft completed its $7.6 billion acquisition of gaming company Zenimax.
Shares of Nuance were up 21% in premarket trading Monday. Microsoft shares were slightly positive.
Nuance would be aligned with the part of Microsoft’s business that serves businesses and governments. Nuance derives revenue by selling tools for recognizing and transcribing speech in doctor office visits, customer-service calls and voicemails. In its announcement, Microsoft said Nuance’s technology will be used to augment Microsoft’s cloud products for health care, which were launched last year.
Nuance reported $7 million in net income on about $346 million in revenue in the fourth quarter of 2020, with revenue declining 4% on an annualized basis. Nuance was founded in 1992, and had 7,100 employees as of September.
Microsoft said Nuance CEO Mark Benjamin will remain at the company and report to Scott Guthrie,who is in charge of Microsoft’s cloud and artificial intelligence businesses.
Nuance has a strong reputation for its voice recognition technology, and it has been considered an acquisition target for companies like Apple, Microsoft and more for several years. Microsoft already has voice recognition built into many of its products, but it has recently shut down some products featuring its voice assistant Cortana.
This story is developing, check back for updates.
–CNBC’s Alex Sherman and Jordan Novet contributed to this report.