MSFT Stock Slightly Up as Microsoft Acquires Nuance in $16 Billion Deal

Microsoft Corporation (NASDAQ: MSFT) has acquired Nuance Communications (NASDAQ: NUAN), a voice recognition company in a deal worth $16 billion and around $19 billion which is said to include debt. The purchasing rate per share will be 23% more than its closing price on Friday, which means each share will be bought for $56.

This report has had a very good effect on the shares of both companies with Nuance seeing a 15.95% growth and Microsoft having a little addition to its price. After the news, MSFT stock went slightly up and closed with a 0.023% gain yesterday. Today in the pre-market, the stock is at $256.35 (+0.17%).

Microsoft is known for its high-profile acquisitions, and after it purchased Linkedin Corporation in 2016, this is its largest acquisition. Microsoft has been active in its expansion intention as they recently acquired Zenimax Media, a gaming company for $7.6 billion just last month.

 It is important to note that Microsoft is looking for growth through acquisition, and prior to this deal, they had made an effort to acquire Tiktok US, Australia, Canada, and New Zealand for $30 billion but did not materialize. In addition to their several acquisitions, a conversation is ongoing to acquire Discord, a chat application for around $10 billion. Among the giants, only Amazon.com Inc (NASDAQ: AMZN) has spent more than $5 billion in an acquisition apart from Microsoft.

Satya Nadella, the CEO of Microsoft, explained that the high level of acceleration in the digital transformation influenced their acquisition as Nuance has a health care tool that can play a key role. According to him, the digital tech will be very critical in the provider market looking at the current trend.

It has been reported that the CEO of Nuance, Mark Benjamin will remain at the company. However, he will report to the in-charge of cloud and artificial business of Microsoft, Scott Guthrie.

Nuance, according to the report, recorded $346 million in revenue in the last quarter of 2020 on which the company recorded a net income of $7 million. This amount was a 4% decrease from its previous year.

Microsoft is reportedly on the safer side of the regulatory scrutiny compared to the likes of Facebook Inc (NASDAQ: FB) and Google LLC (NASDAQ: GOOGL) who are constantly monitored for any large-scale acquisition. It is believed that any high-profile acquisition from these companies would lead to political attention which has affected them, especially Google. Their attempt to purchase Tiktok was affected by their regulator status, putting Microsoft at advantage.

While it is believed that Microsoft is treated differently by governments, Satya Nadella in response explained that their provided service makes them unique. He stated that this is not an aggregation play, but their work of providing technology to ensure that doctors and providers safely keep data gives them the upper hand. This explanation means Microsoft provides technology to protect data, and the others use consumers’ data for their work which puts them at risk.

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