International Business Machines Corp. said Thursday that it
agreed to buy Merge Healthcare Inc. for about $700 million in cash,
as it continues to build its Watson Health platform it launched in
April.
The offer of $7.13 a share is a 32% premium to Merge's closing
price of $5.41 a share on Wednesday. IBM says the deal values Merge
at $1 billion, a figure that likely includes debt.
Merge provides medical image handling and processing to clinical
research institutes, pharmaceutical firms and health-care
sites.
Through the combination, IBM is hoping Merge's clients will be
able to use Watson's health platform to see historical images,
electronic health records and data from wearable devices. IBM sees
the platform resulting in more personalized approaches to diagnosis
and monitoring in fields such as radiology, cardiology and
orthopedics.
The deal, subject to regulatory approval, is expected to close
later this year.
Through Watson Health, IBM has been working to position itself
as a large broker of health-related data.
In April, IBM unveiled a partnership with Apple Inc., Johnson
& Johnson and Medtronic Inc., as well as the acquisition of two
medical-data software companies.
IBM is hoping to transfer its experience in data processing to
the sensitive field of health care, part of an evolving strategy to
pool and analyze data from other companies, such as Twitter Inc.
and the Weather Channel.
The Watson Health project reflects a growing view among
technology vendors and medical providers that patient information
which could yield valuable insights—and business opportunities—is
locked up in proprietary silos.
Such insights are increasingly valuable as the payment approach
in health care shifts toward rewarding favorable health outcomes
rather than services rendered. Watson Health is attempting to
marshal huge amounts of scrambled and aggregated patient data in
the service of providing individualized health care that might
improve outcomes and cut costs.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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