IBM and Lenovo server deal faces delay due to security review
Two firms reportedly seeking more time to gain approval amid worsening US-China relations
The sale of IBM's x86 server business to Lenovo is facing a delay due to scrutiny from a US government committee regarding security issues, according to reports.
Announced in January, the $2.3bn agreement will see IBM hand over its entry-level and mid-range server business to Lenovo, plus associated maintenance and servicing contracts. The China-based firm already has a close relationship with IBM, having bought its PC client division back in 2005.
Now, the two firms are seeking more time to gain approval from a US government body tasked with reviewing the deal for security issues, according to a report from news agency Bloomberg.
The Committee on Foreign Investment in the US (CFIUS) is tasked with examining the acquisition of US companies by outside business interests, and its approval is vital for the deal to go ahead.
However, IBM and Lenovo are confident that they are still on track to complete the deal by the end of the year, Bloomberg said.
Extending the review period is expected to give US regulators more time to scrutinise the proposed takeover, which has come at an unfortunate moment in time for the two firms due to growing tensions between the US and Chinese governments over opposing claims involving spying and hacking activities.
The Chinese government is also said to be looking at whether its banking sector is too reliant on technology from US firms such as IBM, it was reported last month.
Meanwhile, IBM recently went live with a website to keep clients and business partners up to date with key information relating to the transition of IBM's x86 server business to Lenovo.
Security worries aside, the move is expected to be beneficial to both firms, with IBM able to focus on high-value products such as its mainframe and Power systems and cloud services, while still being able to provide customers with x86 server and client hardware through its partnership with Lenovo. In the other direction, Lenovo will gain the right to resell IBM products alongside its own.