Microsoft Corporation is making a big health push with the purchase of voice-recognition software maker Nuance Communications – and the company is likely to get a bargain.
The tech giant confirmed on Monday that it plans to buy Nuance
for $ 56 a share in cash, with a deal worth $ 19.7 billion, including Nuance’s net debt. The proposed acquisition, which is expected to end later this year, will bring Microsoft back
access to Nuance tools for conversational artificial intelligence (AI) and other intelligence products for the healthcare industry.
Nuance shares rose 17% to $ 53.32 in Monday morning trading, while Microsoft’s shares were little changed. The deal, which values Nuance shares at about 23% higher than Friday’s closing price, will be the biggest for Microsoft since it bought LinkedIn for more than $ 26 billion in 2016. .
Microsoft plans to buy Nuance has been reported by several stores over the weekend previous official transaction announcement on Monday. Guggenheim analyst Glen Santangelo remarked in a Sunday note to customers that Microsoft’s interest in the company is “not too surprising” as the companies have worked together to develop product “smart around”, although he was amazed at the deal price.
Nuance buy price of $ 56 per share seems “relatively low given all the opportunities we believe lie ahead. [Nuance’s] business, ”wrote Santangelo on Sunday. He emphasized Nuance’s Dragon Ambient eXperience (DAX) service, which uses artificial intelligence to gather information about a patient’s health problems during visits.
“Though we appreciate that this is often close [price target] is 58 dollars, we will remind investors that [price target] is on a one-year basis – and in the wake of an acquisition we expect the company to generate a more substantial premium, ”he wrote ahead of the official announcement. Santangelo then added that he “will not rule out the possibility of a competitive bidding situation”.
Wedbush analyst Daniel Ives calls the Nuance deal a “trophy” for Microsoft’s management team, which could signal more interest in the merger in the coming months, due to the company. Reported interest in Discord chat platform purchases with a value of up to 10 billion dollars.
“The Nuance deal is a no-brainer strategy in our opinion for Microsoft and fits like a glove in its healthcare efforts at a time when hospitals and doctors are in the hands. Capture next-generation AI capabilities, “Ives wrote in a customer note following the announcement of the deal, while reiterating a better rating and $ 300 target price.
Outside of healthcare, Ives sees room for Microsoft, which has partnered with Nuance, to integrate the company’s cutting-edge voice tools “across the entire consumer and business ecosystem.” .
“Nuance expertise will combine the breadth and depth of Microsoft’s cloud, including Azure, Teams and Dynamics 365, to deliver solutions,” Microsoft and Nuance said in a statement announcing their agreement. security solutions and next-generation customer interaction ”.
Microsoft shares have risen 19.4% over the past three months according to the Dow Jones industrial average
has increased by 8.6%.