In one of the biggest tech deals, Microsoft announced acquiring speech-recognition company Nuance Communications for $19.7 billion in an all-cash transaction.

The companies entered into a definitive agreement under which Microsoft will acquire Nuance for $56 per share, implying a 23 percent premium to Nuance’s closing price that is inclusive of Nuance’s net debt.

Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud & AI at Microsoft.

The transaction is intended to close this calendar year.

Microsoft said that the acquisition will combine solutions and expertise to deliver new cloud and AI capabilities across healthcare and other industries. Nuance is a pioneer and a leading provider of conversational AI and cloud-based ambient clinical intelligence for healthcare providers.

“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.

“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,” he added.

At $19.7 billion, Nuance would be Microsoft’s second largest acquisition after LinkedIn that the company bought in 2016 for $27 billion.

The Microsoft Cloud for Healthcare, introduced in 2020, aims to address the comprehensive needs of the rapidly transforming and growing healthcare industry.

Nuance solutions are currently used by more than 55 per cent of physicians and 75 per cent of radiologists in the US and used in 77 per cent of US hospitals.

“The path forward is clearly with Microsoft that brings intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference,” said Mark Benjamin, CEO, Nuance.

Nuance’s Healthcare Cloud revenue experienced 37 per cent year-over-year growth in Nuance’s fiscal year 2020.

The company reported $7 million in net income ($346 million in revenue) for its first quarter that ended December 31, 2020.