updated 03:03 pm EDT, Sat August 16, 2014
Lenovo on track to buy IBM server unit for $2.3 billion
IBM has gained a US national security regulatory agency's approval in one of its first steps to sell its server division to Lenovo Group, a Chinese company. The Committee on Foreign Investment in the US has deemed that the $2.3 billion dollar sale can continue with little or no risk to US security interests, despite rising conflicts about Internet issues and continued espionage allegations between the nations.
IBM said that the positive result of the review was "good news for both IBM and Lenovo, and for our customers and employees." Customers of the x86 based servers span the entire range of US defense and security, including the US Army, US Navy, and the Department of Homeland Security.
As part of the purchase, Lenovo gains IBM's System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers with associated software, blade networking, and IBM's maintenance operations. IBM doesn't lose all of its server business, as it retains its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.
According to a report from Bloomberg, a condition of the deal that the US regulators applied is continued support on existing servers for five years. Also levied on the deal is a $200 million fine on Lenovo, should it fail to close the deal for the server arm of IBM.
The two will also enter a strategic relationship involving a global OEM and reseller agreement for IBM's various entry and mid-range data storage systems, as well as parts of IBM's system software portfolio. Approximately 7,500 IBM employees globally will be offered employment at Lenovo at the conclusion of the deal.