Microsoft buying speech recognition firm Nuance in $16 billion deal

The transaction is Microsoft's second largest deal following its purchase of LinkedIn in 2016

Microsoft, on an accelerated growth push, is buying speech recognition company Nuance in a deal worth about $16 billion.

Microsoft will pay $56.00 per share cash. That's a 23 per cent premium to Nuance's Friday closing price. The companies value the transaction at $19.7 billion, including debt.

Shares of Nuance surged about 23 per cent in Monday premarket trading.

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Microsoft's acquisition of Nuance comes after the companies formed a partnership in 2019.

The Redmond, Washington, company said that the deal will double its total addressable market in the health care provider industry, bringing its total addressable market in health care to nearly $500 billion.

The transaction is Microsoft's second largest deal following its $26 billion purchase of LinkedIn in 2016. Last September, it bought for video game maker ZeniMax for $7.5 billion.

Mark Benjamin will continue as Nuance CEO.

The transaction is expected to close this year. It still needs approval from Nuance shareholders.