By Aaron Tilley 

Microsoft Corp. has agreed to acquire speech-recognition firm Nuance Communications Inc. for $19.7 billion, adding to a series of big deals the company has struck to offer an expanded range of software tools to its customers.

The two companies on Monday said Microsoft agreed to pay $56 per Nuance share in the all-cash deal, a 23% premium over Friday's closing price. The deal value includes Nuance debt, the companies said.

The acquisition is Microsoft's second largest under Chief Executive Satya Nadella after the company spent about $26 billion for professional network LinkedIn Corp. in 2016.

Nuance, based in Burlington, Mass., was a pioneer in speech recognition and artificial intelligence technology. Its software formed the basis of Apple Inc.'s Siri voice assistant before the Cupertino, Calif-based company switched to an in-house version. Nuance has explored a possible sale as far back as 2014, when Samsung Electronics Co. and private-equity firms were seen as the most likely buyers.

Voice assistants have enjoyed growing adoption as consumers have embraced smart devices around their home. Amazon.com Inc. also helped popularize its Alexa voice assistant through its Echo smart speaker and Alphabet Inc.'s Google offered equipment with its version of a virtual helper, called Google Assistant.

Microsoft also has been investing in speech systems for years, though with less success. Last year, Microsoft said it would shift its consumer voice assistant offering, called Cortana, away from trying to compete with Amazon and Google in the consumer market to focus more on supporting the company's business-focused software tools. Last month, Microsoft announced it would stop supporting its Cortana app on smartphones and that the only smart speaker that supported Cortana removed Microsoft's voice assistant.

Mr. Nadella has a record of deal making since he took over the company in 2014. He bought the owner of the Minecraft videogame Mojang AB within months of taking the top job. He followed the LinkedIn acquisition with the purchase of code-collaboration site GitHub for $7.5 billion two years later.

Last year, he attempted to acquire parts of popular short video app TikTok, before talks fell apart. Soon after, Microsoft acquired videogame maker ZeniMax for $7.5 billion, the maker of the popular Doom franchise. The company this year has held talks to acquire messaging platform Discord Inc., The Wall Street Journal reported last month.

Nuance has customers in the healthcare, finance and other industries, sectors where many companies use Microsoft products. The two companies in 2019 said they would partner around the use of artificial-intelligent assistants for doctor visits. The healthcare product would be built on top of Microsoft's Azure cloud service, they said at the time.

Microsoft has struck other deals around AI assistants in recent years. In 2018, Microsoft acquired Semantic Machines, a startup building conversational artificial intelligence products.

Write to Aaron Tilley at aaron.tilley@wsj.com

 

(END) Dow Jones Newswires

April 12, 2021 09:15 ET (13:15 GMT)

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