Private Equity Firm Francisco Partners Acquires IBM's Struggling Watson Health Assets
IBM sells the data assets of its underperforming Watson Health unit to Francisco Partners for a reported $1 billion. The private equity firm plans to form a new standalone health data company while retaining the existing management team.
IBM sells the data assets of its Watson Health unit to private equity firm Francisco Partners. Although the exact purchase price remains undisclosed, previous reports estimate the deal's value at approximately $1 billion. This acquisition includes a wide variety of health data properties, giving Francisco Partners a massive portfolio of healthcare information and imaging software offerings.
IBM originally launches Watson Health in 2015 with grand ambitions to dominate the healthcare industry through artificial intelligence. The tech giant spends billions acquiring companies like Merge Healthcare and Truven Health Analytics to build out the division. However, the unit ultimately fails to deliver the expected results, prompting CEO Arvind Krishna to shift priorities and put the division up for sale.
Francisco Partners plans to build a new standalone company using these acquired assets and surprisingly retains the existing management team. This sale occurs just as the healthcare technology sector experiences massive growth, highlighted by Oracle's $28 billion acquisition of Cerner and Microsoft's $20 billion purchase of Nuance Communications. Despite this booming market, IBM chooses to exit the space while Francisco Partners bets on the division's unrealized potential.