IBM, Lenovo Server Deal May Take Longer Than Expected
The two companies reportedly are seeking more time to gain approval from a U.S. government agency tasked with reviewing the deal for security issues.Lenovo's $2.3 billion acquisition of IBM's low-end x86 server business reportedly could take longer than expected to close due to an ongoing security review by U.S. regulators. The two companies are seeking more time for the security review by the Committee on Foreign Investments in the U.S. (CFIUS), a move that would give Lenovo and IBM more time to gain the necessary approval to move forward with the deal, according to a report by Bloomberg. CFIUS is a governmental interagency group that reviews for national security purposes the acquisitions of domestic companies by foreign entities, and the group's approval is necessary before such a deal is closed. According to reports, a usual CFIUS review takes 75 days, but to extend the process to buy more time, companies can pull their paperwork and then refile with the group, restarting the 75-day timetable. Reports began to surface in early April that IBM's sale of its x86 server business to Lenovo—which is based in Beijing, China—was getting close scrutiny from U.S. agencies around issues of national security. Government agencies, including the Department of Defense and the FBI, buy x86 servers from IBM, as do the largest telecommunications companies, such as AT&T and Verizon Wireless.
The CFIUS security review of the deal, which was announced in January, comes at a time of increased tension between the United States and China over such issues as cyber-spying and hacking. U.S. lawmakers for several years have expressed national security concerns about such Chinese companies as Huawei Technologies and ZTE, worried that their products could contain back doors that would allow Chinese officials access to U.S. networks and sensitive data.