• Nuance Communications shares shot up 30% early Monday on reports ahead of Microsoft's announcement of a $19.7 billion buyout deal.
  • Microsoft plans to buy the speech-recognition software maker for $56 a share and the deal will include Nuance's net debt.
  • Nuance shares were halted ahead of Monday's regular trading session.
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Nuance Communications shares surged 31% early Monday on reports ahead of an official announcement from Microsoft that it will purchase the AI speech-recognition software maker for $19.7 billion in cash, with the price to include Nuance's net debt.

Microsoft, in a joint statement, said it will buy Nuance for $56 a share, which is a 23% premium to Nuance's closing price on Friday. Bloomberg reported late Sunday that the two companies were in talks, citing sources who asked not to be identified. An agreement with Nuance would be Microsoft's largest since it purchased professional networking site LinkedIn in 2016.

Nuance jumped by as much as 31% to $59.65 ahead of Monday's opening bell. The shares closed at $45.58 on Friday. Nuance shares were put on a trading halt during Monday's premarket session before Microsoft's announcement.

Nuance and Microsoft have been working together since 2019, focusing on Nuance's products that allow clinicians to capture patient discussions and integrate them into electronic health records. The buyout deal is expected to close by the end of the calendar year 2021 and has been unanimously approved by the boards of both Nuance and Microsoft.

Microsoft said the deal will double its total addressable market in the healthcare provider space to nearly $500 billion. Nuance's CEO Mark Benjamin will remain in his role.

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