Microsoft completes the Nuance purchase: $18.8 billion
On 12 April 2021 Microsoft and Nuance filed the terms of their agreement: $56.00 a share in cash, a 23 per cent premium to the closing price of 9 April, the transaction valued at $19.7 billion inclusive of net debt. On 4 March 2022 the deal closed, and the business-combinations note in Microsoft's annual report gives the total purchase price as $18.8 billion, consisting primarily of cash.
Why it matters
This is the largest sum ever paid for a speech-systems developer, and it is documented twice with a $900 million difference: $19.7 billion in the announcement, an enterprise value including debt, and $18.8 billion as the purchase price in the accounts. Both numbers come from the buyer and both are correct; they answer different questions, which is exactly why they are routinely confused.
The allocation in the annual report: goodwill $16,308 million, intangible assets $4,365 million, other assets $59 million, other liabilities $(1,971) million, total $18,761 million. The intangibles split into customer-related $2,610 million over an average nine years, technology-based $1,540 million over five and marketing-related $215 million over four, seven years across the whole. Other liabilities include $986 million of convertible senior notes issued by Nuance in 2015 and 2017, of which $985 million was redeemed before 30 June 2022. Nuance is reported within the Intelligent Cloud segment. For scale, the same report names ZeniMax at $8.1 billion in March 2021 and the announced Activision Blizzard agreement at $68.7 billion. What this record does not assert. The market shares in the announcement — more than 55 per cent of US physicians, 75 per cent of radiologists and 77 per cent of hospitals — are the parties' own claims in their joint release rather than an audited disclosure, and this record does not endorse them. The strings 56.00 and 19.7 occur zero times in the annual report, as do Dragon and DAX: those details come from the 2021 announcement document, not from the accounting note.