Acquisition of IBM X86 Server transactions through Cfius review

Absrtact: August 16, according to the Bloomberg Web site, IBM's X86 server business was sold to Lenovo by the US Foreign Investment Commission's National security assessment, which allowed the deal to continue. IBM in a statement

August 16, according to the Bloomberg Web site, IBM's X86 server business sold to Lenovo for 2.3 billion U.S. dollars (about 14.2 billion yuan) transactions through the U.S. Foreign Investment Commission's national security assessment, so that the deal can continue.

In a statement, IBM said the results of the CFIUS assessment were "good news for IBM, Lenovo, and our customers and employees". A person familiar with the matter said that while the Cfius had put some strings on the deal, it had little impact on the business and did not need to change the terms of the agreement, but did not disclose the additional conditions proposed by CFIUS.

The reason for the deal's scrutiny is that the Chinese and American governments have different views on cyber security. Once the deal is complete, IBM can get out of its unprofitable business and focus on high-growth areas, such as cloud computing and data analysis, and Lenovo's share of the global computing hardware market will be higher.

"This is part of IBM's strategy for phasing out hardware manufacturing, switching to service and high profitability," said Ivan Feinseth, chief investment officer of investment company Tigress Financial, LLC, in an interview. It is trying to change the direction of the company's development. "Fernsess's rating for IBM stocks is" neutral "(neutral).

IBM and Lenovo did not comment on whether the Foreign Investment Committee had made any additional terms in approving the deal. Christopher Padilla, vice president of the IBM Government program, said in January that most of IBM's X86 servers were produced in Shenzhen Christopher Palidia.

The acquisition of the IBM X86 server was reviewed by Cfius, a good omen for Lenovo to buy Motorola Mobile's deal with Google in 2.91 billion dollars (about 17.9 billion yuan).

"We will continue to work with US regulators to ensure that two deals are completed as soon as possible," Lenovo said in a statement. We still plan to finish the two deals by the end of this year. ”

U.S. government agencies, including the Ministry of Defence and the Ministry of National Security, are users of IBM X86 servers, according to Bloomberg data. A major reason for US regulators to release the deal is that IBM will continue to provide maintenance services to existing customers over the next 5 years, unnamed sources said.

The Foreign Investment Commission's assessment of the deal lasted 150 days, and two companies were forced to resubmit an application after the initial 75-day evaluation period expired, said the source. In the survey, the Cfius raised hundreds of issues, focusing mainly on the maintenance of existing IBM X86 servers and the ability of Lenovo to access these servers.

Lenovo successfully acquired IBM's PC business in 2005 through a Cfius review.

The 2012 Cfius review of Chinese acquisitions of US assets was more than 1 time times higher than in 2011, making Chinese capital the most censored foreign investor

People familiar with the matter said in January that if a deal to buy IBM's X86 server business was halted, Lenovo would pay IBM a "break-up fee" of twice times the industry average. Lenovo's severance payment could be as high as $200 million trillion (about 1.23 billion yuan), according to one person familiar with the matter. Bamboo)