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August 18, 2014

Why regulators approved IBM’s x86 server sale to Lenovo

US Treasury initially had security fears over Chinese spies.

By Joe Curtis

US regulators have finally approved IBM’s $2.3bn sale of its x86 server business to Lenovo.

The sale had been under review since January by the US Treasury’s Committee on Foreign Sales, which had been concerned that Chinese firm Lenovo could allow China’s government to install backdoors into the servers.

However, a press release from IBM on Friday read: "The clearance by CFIUS of this transaction is good news for both IBM and Lenovo, and for our customers and employees. The parties now look forward to closing the transaction.

"The approval of the $2.3bn sale to Lenovo enables IBM to focus on system and software innovations that bring new kinds of value to IBM clients in areas such as cognitive computing, big data and cloud, and provides clarity and confidence to current x86 customers that they will have a strong partner going forward."

The Treasury appears to have accepted both firms’ arguments that x86 is a low-end server technology, that much of IBM’s hardware is made in China, and that Lenovo’s products are reliable and secure.

The deal could now be finalised by the end of the year.

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