Helping Watson ‘see’: IBM plans to acquire Merge for $1B

In a move to bolster its Watson Health unit, IBM has announced that it plans to acquire Merge Healthcare, provider of medical image management systems and other healthcare technologies, in a transaction valued at $1 billion.

The idea behind the acquisition is to help Watson “see” by combining its advanced image analytics and cognitive capabilities with Merge’s image management platform, according to a statement from the companies.

“Healthcare will be one of IBM's biggest growth areas over the next 10 years, which is why  we are making a major investment to drive industry transformation and to facilitate a higher quality of care," said John Kelly, senior vice president, IBM Research and Solutions Portfolio.

"Watson's powerful cognitive and analytic capabilities, coupled with those from Merge and our other major strategic acquisitions, position IBM to partner with healthcare providers, research institutions, biomedical companies, insurers and other organizations committed to changing the very nature of health and healthcare in the 21st century,” Kelly continued.

Building on Watson’s natural language processing abilities, IBM said the Watson Health Cloud could someday be used to unlock insights hidden within current and historical medical images in a HIPAA-enabled environment. Images could be cross-referenced against lab results, genomic tests, clinical studies and many other data points.

Under the terms of the transaction, Merge shareholders would receive $7.13 per share in cash, a 32% premium to Wednesday’s closing price, according to Bloomberg News. Closing is subject to shareholder approval, regulatory review and other customary closing conditions. The companies said they expect the deal to close later this year.

This is the third major health-related acquisition for IBM since launching the Watson Health unit in April. The company previously announced acquisitions of population health-focused Phytel and healthcare intelligence company Explorys.