Microsoft is on the verge of closing a deal to buy speech recognition pioneer Nuance Communications, which would value the artificial intelligence company at around $ 16 billion, according to people briefed on the matter.
The deal would be Microsoft’s second-largest acquisition ever. It comes after the tech giant explored a number of buyout opportunities over the past 12 months, including an approach for social media groups TikTok, Pinterest, and Discord.
Those briefed on the matter said a deal could be announced this week as the two sides close to finalizing the deal. They warned that there was still a slim chance the deal could collapse.
Nuance, based in Burlington, Mass., Was one of the early developers of speech recognition AI. Its technology was used to power the voice responses of Apple’s virtual assistant, Siri.
The company’s voice recognition systems are used in a wide variety of industries. However, after years of small acquisitions, it has attempted to divest itself of its business and refocus on a handful of markets to revive its growth.
His revenue has declined in each of the past two years, and he has created or sold a number of business units, mostly rebuilding himself around cloud-based systems for hospitals and doctors. Inroads into the health care sector contributed to a rebound in its shares, which more than tripled from a low point last March, valuing it at around $ 13 billion.
Microsoft is a leader in the natural language processing AI that underpins these systems. An acquisition of Nuance would give it a way to sell to a large number of new customers in the healthcare, financial services and telecoms sectors, among others. However, Nuance only made $ 29 million in net profit last year, after several years of losses, and its revenue has fallen by more than a quarter from its peak of over $ 2 billion. in 2018.
Microsoft has been on a buying spree in recent years as it has used its strong balance sheet to further strengthen its business. He acquired the professional networking site LinkedIn for $ 26 billion in 2016. Two years later, he bought the code repository group GitHub for $ 7.5 billion, and six months ago he took over private gaming company ZeniMax for $ 7.5 billion.
The Seattle-based tech giant, which specializes in enterprise cloud services used by businesses and government rather than consumers, was able to recover multiple assets as it avoided the political backlash that made it more difficult for Facebook and Google. major acquisitions.
Bloomberg first reported that the two companies were in advanced talks.