Lenovo's x86 server buyout from IBM clears last US hurdle

The agency that reviews foreign deals on security grounds has approved the $2.3 billion acquisition

Lenovo's planned acquisition of IBM's x86 server business for US$2.3 billion has cleared a major U.S. regulatory hurdle, paving the way for the deal to close by the end of the year.

The deal has been cleared by the Treasury Department's Committee on Foreign Investment in the United States (CFIUS), which looks into transactions involving foreign owners that could affect U.S. national security.

In June, The Wall Street Journal reported the deal could be in jeopardy because the U.S. has sometimes viewed Chinese companies with suspicion. In October 2012, U.S. lawmakers advised the private sector not to buy equipment from Huawei or ZTE, saying the gear posed national security risks.

To allay such concerns, Lenovo launched a public relations campaign to prove the deal won't threaten U.S. national or business interests. In 2005, Lenovo had completed the acquisition of IBM's PC business for $1.25 billion, a deal also approved by the CFIUS.

With CFIUS clearance, Lenovo and IBM "have completed the regulatory process in the U.S.," Lenovo spokesman Brion Tingler said in an email.

China's Ministry of Commerce (MOFCOM) has already approved the deal. The transaction also needs to be approved by the Canadian government, according to Lenovo.

IBM will divest its x86 server assets but retain its Power8 line of microprocessors and servers.

Lenovo is also going through the necessary regulatory steps to clear its $2.91 billion acquisition of Motorola Mobility, which was announced in January.

Lenovo said both transactions are on track to be finished by the end of the year.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

Tags business issuesregulationIBMLenovoU.S. Department of the TreasurygovernmentMergers and acquisitions

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