Microsoft said today it would buy artificial intelligence and speech technology firm Nuance Communications for about $16 billion in cash, as it builds out its cloud strategy for healthcare.
Both companies partnered in 2019 to automate clinical administrative work such as documentation.
Today's deal will see them gain from a boom in telehealth services with medical consultations shifting online due to the Covid-19 pandemic.
"Nuance provides the AI layer at the healthcare point of delivery," Microsoft CEO Satya Nadella said in a statement.
"AI is technology's most important priority, and healthcare is its most urgent application," the CEO added.
Microsoft's offer of $56 per share represents a premium of 22.86% to Nuance's last close.
Shares of Nuance rose nearly 23% in pre-market trading.
Nuance helped launch Apple's assistant Siri and also makes software for businesses including the automotive sector.
Mark Benjamin will remain the chief executive officer of Nuance and will report to Scott Guthrie, executive vice president of Cloud & AI at Microsoft, the company said.
The deal follows Microsoft's recent acquisition of gaming company ZeniMax Media, and reports of buyout interests in messaging platform Discord, which also allows live audio events.
A deal for Nuance would be Microsoft's second-biggest, after its $26.2 billion acquisition of LinkedIn in 2016. Including net debt, the all-cash transaction is valued at $19.7 billion.
