14 DAY TRIAL // Not long ago, Lenovo announced its plans to buy IBM's low-end server business for $2.3 Billion / €1.69 Billion, but not everyone is as enthused about the idea as the company itself. In fact, some US higher-ups are very worried.
Major infrastructure and telecommunication companies always need to subject themselves to close scrutiny by the government.
After all, government agencies themselves rely on their services, both for carrying out their job and for doing so in a secure fashion.
Many of IBM's servers are used by the Pentagon, the FBI and US telecoms, and it is experts from IBM that are often called in to deal with system failures, security issues and the like. After all, customer support is an integral part of such a company's business.
But now, Lenovo, a company from a different and far-off country, China, has begun the process of acquiring IBM's low-end business unit.
The Pentagon, FBI and the telecoms we have mentioned before are worried that, once Lenovo gains ownership of that division, China will be able to spy on the USA and acquire many secrets.
And considering that IBM servers are used by many government agencies, chemical plants and electric companies, that isn't a concern easily brushed off.
That's why the Interagency Committee on Foreign Investment in the US will be reviewing the deal between the two corporations, Bloomberg reports.
Depending on the results of that investigation, the US may or may not block the foreign purchase. The same way the government repeatedly blocked Huawei from doing business, sometimes even outside the US, due to concerns of cyberwarfare.
If the deal is blocked, IBM will probably receive a government grant of some sort to keep the division flowing, though it will no doubt seek out in-country purchasers as well. Either way, if the agreement falls though, Lenovo will pay IBM $200 million / €145 million.
IBM is sure that the review will have a “positive outcome” though, because, under the terms of the deal, IBM will continue to provide support to server equipment for 5 years. That means Lenovo won't have access to the systems used by those plants, electric companies, etc. If the review finds it necessary, that period could be extended.
Unfortunately, we can't say for sure how long the examination of the proposed deal between the two corporations will take. Probably a couple of months. This is, after all, a multi-billion dollar transaction, so the stakes are high.