IBM makes $1B bid for Merge to bolster Watson's image analytics capabilities

IBM ($IBM) has inked an agreement to buy Merge Healthcare ($MRGE) for $1 billion. The acquisition would move its Watson computer system beyond natural language and into medical images, a field in which IBM thinks its computing power can improve the detection of changes and anomalies.

If the deal closes later this year as expected, it will become the biggest of three quick-fire takeovers made by IBM since it set up its Watson Health unit in April. IBM's willingness to hand over $1 billion in a $7.13-a-share deal--a figure that represents a 31% premium over Merge's closing price the day before the bid became public--is underpinned by its belief that the acquisition can open up a major new market for Watson. Merge has faced difficulties in recent years, but, with many top biopharma companies and clinical research sites using its tools, it gives Watson a path into image analysis.  

Of course, the path in is only useful if Watson can deliver something users want, a task IBM thinks it can achieve by having the computer system cross-reference images against its existing trove of health data. "What's happening is that scanning and imaging machines have gotten incredibly good. They are generating extremely dense images and images in motion in some cases. Doctors are overwhelmed by the content of these images. Watson will help the doctor interpret and understand these complex images," IBM SVP John Kelly told TechCrunch.

IBM estimates images account for 90% of all medical data, making it an area the company cannot afford to ignore as it works to integrate Watson into healthcare and R&D. The IT giant has spent the past two years training Watson to recognize images, a skill that it will now have the chance to put to use in real world and R&D settings.

- here's TechCrunch's article
- read NYT's take
- read the release