It has been quite a while since Lenovo announced its intention to purchase IBM’s server unit. The deal might not go through smoothly. A new report suggests that this bid has raised national security concerns, which means that the deal will now come under scrutiny and can possibly even be delayed. According to the report, the interagency Committee on Foreign Investment in the U.S. is going to review the deal.
IBM servers are used by US telecoms, FBI and the Pentagon. Lenovo is a Chinese company, so you can see where this is going. The U.S. and China have long accused each other of cyberattacks, and the U.S. has often raised questions against Chinese companies and their relationship with the People’s Republic government. Obviously the primary concern is that the purchase may allow China to access servers in those sensitive departments, so regulators aren’t going to go easy.
Bloomberg reports that apart from the fact that IBM servers are used at several government agencies, the regulators will also look into their usage inside the country’s critical infrastructure, including but not limited to electric companies and chemical plants. IBM tells the scribe that its confident that this review will have a “positive outcome.” If for some reason the regulators don’t allow the deal to go through, Lenovo would have to pay IBM $200 million as a breakup fee.
- 2014-04-09: PC Shipments See 4.4% YOY Decline, According To IDC
- 2014-04-06: Lenovo's IBM Server Unit Bid Raises National Security Concerns
- 2014-03-31: Motorola By Lenovo Brand Might Be Under Consideration
- 2014-03-30: Lenovo Recalls ThinkPad Batteries Over Fire Hazard
- 2014-03-21: Lenovo Spends $100 Million Acquiring New Patents And Licenses
- 2014-01-21: Lenovo Rumored To Acquire IBM's Low-End Server Business