Lenova-IBM Server Deal Gets China Nod
By Kalyan Kumar | July 8, 2014 8:33 AM EST
With the anti-monopoly department in the Ministry of Commerce of China, giving its nod for the acquisition Lenovo, has now the approval of the U.S. authorities to complete the deal. The deal will have Lenovo paying $2.07 billion in cash and the rest in Lenovo stock.
IBM Low-end Server Business
Lenovo's $2.3 billion deal for the server business with IBM was announced in January this year. It was supposed to vest the Chinese PC maker control of IBM's x86 servers and maintenance operations. Under the deal, the servers belonging to IBM will support Pentagon's networks. Lenovo would take over the maintenance of these servers after the acquisition.
Zdnet report also informed about how Yang Yuanqing, CEO of Lenovo, hopes the deal will be through by end of this year. He does not expect any objections from regulatory bodies.
U.S. Security Concerns
There had been reports in Bloomberg and other media that U.S. security officials and the Committee on Foreign Investment in the United States (CFIUS) had raised concerns as it relates to the Pentagon's servers.
No Issues on Cyber Security
There had been criticisms over cyber security in recent years with both sides pointing fingers to each other on cyber attacks. Allaying such concerns, Lenovo Chief Executive Yang Yuanqing made it clear that it has never been in the history of Lenovo when any of its domestic or overseas clients raised issues regarding security.
Vital Communication Networks
Reports said IBM servers were extensively used in the communications networks and data centers supporting Pentagon's computer networks. The U.S. security concerns were valid. The two companies faced such situation in 2005 when Lenovo bought out IBM's personal computer business.
After the acquisition, Lenovo and IBM will enter into a strategic partnership that will allow Lenovo to resell IBM's cloud computing and storage systems and software. The deal will also see some 7,000 IBM employees joining Lenovo to service the existing contracts and boost the sales.
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