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Microsoft bags US approval for $19.7B Nuance buy

Microsoft has cleared a major US antitrust hurdle in buying Nuance, maker of the Dragon voice-recognition software, in its second-largest acquisition yet.

Perhaps more notably, Nuance is the company that provided the speech recognition engine for Apple's Siri. Satya Nadella's company will be paying $19.7 billion for the company, which it plans to pair with MS Teams. (The figure includes $3.7 billion for Nuance's net debt, which Microsoft acquires.)

    (Source: Todd A Bishop on Flickr CC2.0)

(Source: Todd A Bishop on Flickr CC2.0)

The US Securities and Exchange Commission (SEC) allowed a deadline for US government objections to expire on June 1, without objecting to the deal.

"The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976" expired on June 1 at 11:59 pm, Nuance said in a Form 8-K filing to the SEC. This "satisfies one of the conditions to the closing of the merger," the company noted.

Assuming the merger receives regulatory approval in other jurisdictions, Microsoft hopes the deal will close around the end of 2021. Mark Benjamin will remain Nuance's CEO and will report to Scott Guthrie, Microsoft's executive vice president for cloud and AI.

But can it read doctors' handwriting?

Nuance also is a big player in health-care transcription, booming at the moment. Currently, 77% of US hospitals and a half million doctors use Nuance's Dragon Medical One platform. The deal arose after the two companies started collaborating in automating healthcare administration in 2016.

Artificial intelligence "is technology's most important priority, and healthcare is its most urgent application," said Satya Nadella about the merger. Nuance applies AI to healthcare at the point of delivery, he explained.

Microsoft is aiming at a bigger piece of a broader voice recognition market predicted to reach $2.7 billion by 2027.

Wedding bells draw closer

The merger trails only Microsoft's blockbuster purchase of LinkedIn by $26.2 billion, and shows a renewed enthusiasm among big tech companies to test regulators' willingness to approve big acquisitions.

For many analysts and investors, a longer and more intense scrutiny of the merger would have signalled more government scrutiny for M&A grabs by the likes of Facebook, Apple and Google, too.

Salesforce appears closer to acquiring Slack Technologies, after facing a second request for more information in February from the US Department of Justice. Microsoft had been rebuffed in its attempts to buy the communications app Discord, and has also been reportedly running the rule over TikTok and Pinterest.


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More successfully, it has recently bought games company ZeniMax for $7.5 billion, the same price it paid for code repository GitHub two years ago. Among Nuance's other high-profile customers, Ford used Nuance's voice recognition technology in its SYNC voice-operated vehicle communications and entertainment system.

The technology, which has been through several generations since 2008, lets users make telephone calls, control music and perform other functions with voice commands. While Microsoft will be relieved for the regulators' approval, one Twitter user, Michael Brebrich, remarked, the US government "may as well scrap antitrust laws for all the good they do."

Also less happy than the wedding couple is an activist shareholder named Susan Finger, who has challenged Nuance's SEC filing in an action in the Southern District of New York.

She says shareholders do not have enough information about the merger, including financial information and details about potential conflicts of interest, to permit them to vote meaningfully on it.

And all this violates the Securities Exchange Act of 1934, Finger adds.

Even with Nuance, you can't make them all happy.

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Pádraig Belton, contributing editor special to Light Reading

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