Microsoft confirmed reports it was set to acquire AI speech recognition specialist Nuance Communications, penning a transaction worth $19.7 billion including net debt.

In a statement, Microsoft said it had entered a definitive agreement to buy the business, a deal which had been earlier estimated at $16 billion.

Nuance Communications provides speech recognition software used in the medical sector and by enterprises for a range of applications including biometric verification.

Customers include major mobile players Telefonica, Verizon and Deutsche Telekom. Its technology was also used in Apple’s Siri voice assistant.

However, on announcing the deal, Microsoft pointed to its target’s presence supplying “conversational AI” technology to the healthcare sector as a key reason for its big-money buy.

“Today’s acquisition announcement represents the latest step in Microsoft’s industry-specific cloud strategy,” the company noted, pointing to the implications for its Microsoft Cloud for Healthcare service.

Microsoft CEO Satya Nadella added: “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.”

The tech giant aims to close the deal by the end of the year subject to approvals by regulators and the AI company’s shareholders, with Nuance Communications CEO Mark Benjamin set to remain in position.