Microsoft is to buy the artificial intelligence and speech technology firm Nuance Communications for approximately $16bn (£12bn), as it builds up its cloud-computing operation for healthcare and business customers.

The proposed acquisition follows Nuance and Microsoft announcing in 2019 they were partnering to help speed up the delivery of ambient clinical intelligence (ACI) technologies and reduce clinical burnout.

Nuance’s products include Dragon Ambient eXperience, Dragon Medical One and PowerScribe One for radiology reporting. Its software listens to doctor-patient conversations and transcribes speech into organized digitized medical notes.

As well as pioneering speech technology, the company helped launch Apple’s virtual assistant, Siri, and now operates in 28 countries with reported revenues of $1.5bn in its last full financial year.

The Massachusetts-based company said it served 77% of US hospitals, providing services including clinical speech recognition, medical transcription and medical imaging.

Microsoft CEO, Satya Nadella, said: “Nuance provides the AI layer at the healthcare point of delivery and is a pioneer in the real-world application of enterprise AI.

“AI is technology’s most important priority, and healthcare is its most urgent application. Together, with our partner ecosystem, we will put advanced AI solutions into the hands of professionals everywhere to drive better decision-making and create more meaningful connections, as we accelerate growth of Microsoft Cloud for Healthcare and Nuance.”

Microsoft said the deal would mean it would be “better able to empower healthcare providers through the power of ambient clinical intelligence and other Microsoft cloud services” and will double its total addressable market in the healthcare provider space.

The deal has been approved by the boards of directors of both Nuance and Microsoft and is subject to approval by Nuance’s shareholders, the satisfaction of certain regulatory approvals, and other customary closing conditions.

Mark Benjamin, CEO of Nuance, added: “Over the past three years, Nuance has streamlined its portfolio to focus on the healthcare and enterprise AI segments, where there has been accelerated demand for advanced conversational AI and ambient solutions.

“To seize this opportunity, we need the right platform to bring focus and global scale to our customers and partners to enable more personal, affordable and effective connections to people and care. The path forward is clearly with Microsoft —  who bring intelligent cloud-based services at scale and who shares our passion for the ways technology can make a difference.”

Mark Benjamin will remain CEO of Nuance, reporting to Scott Guthrie, executive vice president of Cloud and AI at Microsoft. The deal is expected to be closed by this calendar year.

A deal for Nuance would be Microsoft’s second-biggest, after its $26.2bn acquisition of LinkedIn in 2016.