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IBM to Acquire The Weather Company

On Oct. 28, IBM (IBM) announced it plans to acquire The Weather Company. Financial terms of the deal were undisclosed; however, the deal is intended to considerably add to IBM's Internet of Things (IoT) business. The acquisition is expected to close in the first quarter of 2016. Upon approval, IBM will acquire The Weather Company from current owners, The Blackstone Group, Bain Capital and NBCUniversal. In trading following IBM's announcement, the stock was up slightly to close the week at $140.08.

The acquisition of The Weather Company's digital assets will specifically build on IBM's March investment in the Internet of Things and help to further expand the Internet of Things business unit it created in September 2015. The acquisition will also draw on the cognitive capabilities of Watson, enhancing the value of data collected from the acquired business units.

The acquired business units will include The Weather Company's B2B, mobile and cloud-based web properties, but will exclude The Weather Channel, which will continue to operate independently, licensing data and analytics from IBM.

For the third quarter of 2015, IBM reported total revenue of $19.3 billion. Global Technology Services and Global Business Services accounted for 41% and 22% of revenue. Both business units will likely derive revenue from technology and service capabilities within the newly created Internet of Things business. The acquisition of The Weather Company will form the base of IBM's IoT business and will be a big step for IBM in building out its IoT capabilities.

In a recent interview with CNN, David Kenny, The Weather Company's CEO, discussed the acquisition and how IBM's capabilities will be able to help improve business efficiency worldwide.

This article first appeared on GuruFocus.