Software big Microsoft (MSFT) plans to purchase Nuance Communications (NUAN) in an all-cash deal value $19.7 billion, inclusive of Nuance’s internet debt. Microsoft inventory dipped in morning buying and selling Monday whereas Nuance inventory rocketed on the information.
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Microsoft pays $56 a share for Nuance in a transaction it expects to shut this calendar 12 months. The buy worth is a 23% premium to Nuance’s closing worth on Friday. Bloomberg reported Sunday that Microsoft was in superior talks to purchase the substitute intelligence and speech recognition firm.
In morning buying and selling on the stock market today, Microsoft inventory slid 0.2%, close to 255.35. Nuance inventory blasted 16.5% greater, close to 53.10.
Wedbush Securities analyst Daniel Ives known as the acquisition a strategic “no brainer” transfer for Microsoft. He charges Microsoft inventory and Nuance inventory as outperform, or purchase.
Nuance Strong In Health-Care Sector
The deal would give Microsoft extra heft within the health-care sector, the place Nuance has a powerful presence, Ives mentioned. The two corporations have been companions within the health-care business since 2019.
Nuance “represents a unique asset on the health-care front,” Ives mentioned in a word to shoppers. “We also believe Microsoft can further integrate Nuance’s advanced speech technology throughout its consumer and enterprise ecosystem over the coming years to leverage this potential M&A move.”
About 77% of U.S. hospitals use Nuance expertise. Physicians use its software program to transcribe their spoken notes into affected person information. Burlington, Mass.-based Nuance is on the forefront of digitizing the health-care business.
Microsoft mentioned the acquisition will speed up its efforts to offer cloud computing providers for health-care corporations.
“Nuance provides the AI layer at the health care point of delivery and is a pioneer in the real-world application of enterprise AI,” Microsoft Chief Executive Satya Nadella mentioned in a news release Monday.
Microsoft Stock In Buy Zone
On April 5, Microsoft inventory broke out of a flat base at a buy point of 246.23, based on IBD MarketSmith charts. On Friday, Microsoft inventory notched a report excessive of 255.99. It remained within the 5% chase zone of its breakout on Monday.
Nuance inventory broke out of a nine-week consolidation period at a purchase level of 51.72 on Monday.
Microsoft Ramps Up M&A Spending
Redmond, Wash.-based Microsoft is ramping up its exercise in mergers and acquisitions, Ives mentioned. The firm is also all for shopping for Discord, a online game chat neighborhood, for greater than $10 billion, based on information experiences.
“Clearly, Redmond is on the offensive around M&A with the company in a clear position of strength to capitalize on its entrenched position in the cloud going forward with Nuance another feather in its cap,” Ives mentioned.
Oppenheimer analyst Timothy Horan mentioned he’s happy that Microsoft is placing its large money reserves to work. It had about $132 billion in money and short-term investments on the finish of 2020. He charges Microsoft inventory as outperform.
Last month, Microsoft closed its $7.5 billion acquisition of online game studio Bethesda Softworks.
Microsoft inventory is on IBD’s Leaderboard record in addition to the IBD Long-Term Leaders Portfolio.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for extra tales on shopper expertise, software program and semiconductor shares.
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