Microsoft (MSFT) Set to Acquire Nuance Communications for $19.7B
Microsoft MSFT recently announced the acquisition of Nuance Communications NUAN for $19.7 billion (including Nuance’s net debt) in an all-cash deal. Microsoft will pay $56 per share to Nuance shareholders, which represents 23% premium to the stock’s closing price of $45.58 on Apr 9, 2021.
The acquisition has been approved by Boards of Directors of the companies and is expected to be concluded by the end of 2021. The deal is subject to Nuance’s shareholders’ approval as well as other regulatory and customary conditions.
The tech giant expects the buyout to be accretive to its fiscal 2023 non-GAAP earnings per share results but “minimally dilutive (less than 1 percent)” to its fiscal 2022 performance.
Post the acquisition, Nuance’s financial results will be reported under Microsoft’s Intelligent Cloud segment. Mark Benjamin will continue to be CEO for Nuance and will now report to executive vice president of Microsoft’s Cloud & AI segment, Scott Guthrie.
Microsoft Corporation Price and Consensus
Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote
Nuance buyout marks one of the largest acquisitions for Microsoft. LinkedIn acquisition, at a price tag of $26.2 billion, remains one of the major acquisitions till date for the tech giant. Some other notable recent acquisitions include ZeniMax Media (2021) and GitHub (2018) for $7.5 billion each.
How Nuance Buyout Benefits Microsoft?
The acquisition of Nuance Communications is expected to increase Microsoft’s total addressable market or TAM in healthcare vertical to $500 billion, noted the software giant. Microsoft further added that Nuance solutions are leveraged by nearly 77% of hospitals as well as used by more than 55% of physicians and 75% of radiologists in the United States.
Headquartered in Burlington, MA, Nuance Communication specializes in offering innovative conversational Artificial Intelligence (AI) tools to boost business productivity.
The company’s healthcare delivery offerings, including Nuance electronic health record (EHR) services, Dragon Ambient eXperience (DAX), Dragon Medical Virtual Assistant, Dragon Medical One are expected to witness continued momentum amid the pandemic.
Nuance reported revenue growth of 37% year over year for its Healthcare Cloud segment for fiscal 2020 (ended Sep 30, 2020), added Microsoft.
Microsoft and Nuance already have partnership in place to innovate conversational AI and ambient intelligence technologies to augment physician-patient interaction. Both the companies are concentrating on enhancing healthcare delivery by transforming Nuance’s ambient clinical intelligence (ACI) technology.
In 2020, Microsoft integrated its Teams App workflows with Nuance DAX solution. The integration will facilitate a seamless physician-patient conversation. Notably, DAX is built on Microsoft’s Azure along with Nuance’s Dragon Medical platform.
We believe that Microsoft’s purchase of Nuance, which is prominent player in the healthcare virtual assistants’ market owing to the ACI technology, strengthens its prospects in the healthcare domain.
Zacks Rank & Other Stocks to Consider
Microsoft currently carries a Zacks Rank #2 (Buy).
Some better-ranked stocks in the broader sector are Ubiquiti UI, and Etsy ETSY. Both the stocks flaunt a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Ubiquiti, and Etsy is currently pegged at 32.9%, and 25.3%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Etsy, Inc. (ETSY) : Free Stock Analysis Report
Ubiquiti Inc. (UI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
