Lenovo expects IBM, Mobility deals done by year-end
Proposed purchases by China’s Lenovo Group of IBM Corp’s low-end server unit and Google Inc’s Motorola Mobility business should be completed by year-end, Lenovo Chief Executive Officer Yang Yuanqing said on Wednesday.
The deals are currently undergoing approval by US and Chinese regulators.
“Both deals are under the approval process in the two countries and they are progressing,” Yang said at Lenovo’s annual general meeting in Hong Kong.
“We hope to complete the two deals by year-end,” he said.
The Wall Street Journal (WSJ) reported on June 25 that the $2.3 billion IBM deal was in limbo while the US government inves- tigated national security issues, citing people familiar with the matter.
US security officials and members of the Committee on Foreign Investment in the US (CFIUS) are worried that IBM’s x86 servers used in communications networks and in data centers supporting the Pentagon’s networks could be accessed remotely by Chinese spies or compromised, the newspaper reported.
The January announcement for the acquisition came nearly a decade after Lenovo bought IBM’s money-losing ThinkPad business for $1.75 billion, which had also faced scrutiny.
Government officials are also uneasy about the potential sale of servers that may be clustered to-together to perform likelike a powerful computer, the report said.
IBM and Lenovo are trying to address CFIUS concerns about server maintenance and have said that IBM will provide maintenance on Lenovo’s behalf “for an extended period” after the sale, the sources told the WSJ.
IBM and Lenovo have refiled their application for approval of the deal to buy more time, Bloomberg reported in June. Chinese companies faced the most scrutiny over their US acquisitions in 2012, according to a CFIUS report issued in December 2013.
Tensions between the US and China over cyber security issues have reached new highs since the US Department of Justice charged five Chinese military officers with hacking the systems of US companies too steal trade secrets in May.
China denies the charges and has in turn accused Washington of massive cyber spyispying.ing.