International Business Machines (IBM) announced Friday that U.S. national security regulators have approved the company’s plans to sell its x86-based server business to Chinese PC maker Lenovo Group.
Although the exact dynamics that made the sale possible are yet unknown, the U.S. Treasury Department’s Committee on Foreign Investment [CFIUS] have approved the $2.3 billion sale, giving Lenovo control of IBM’s x86 servers, blade networking and maintenance operations.
Lenovo’s acquisition has faced intense scrutiny from U.S. regulators since it was first announced back in January because of national security implications. The Wall Street Journal earlier reported that the proposed deal faced the possibility of being struck down by CFIUS because of concerns that IBM’s low-technology x86 servers, which besides being used in the nation’s communications networks are also used to maintain the Pentagon’s networks, could be accessed remotely by China’s intelligence operatives.
Lenovo however, which has gone through the CFIUS process three times in the past and has successfully received approval, has insisted that its intent to acquire IBM’s server business is purely commercial. Obviously, U.S. regulators have found the threat to be minimal, otherwise the deal would have not been approved.
In a statement, IBM and Lenovo welcomed the development saying that they “look forward closing the transaction.” Lenovo also said it aims to close the deal with the ‘Big Blue’ and its separate, $2.91 billion purchase of Google (GOOGL)’s Motorola Mobility unit by the end of the year.
Lenovo’s acquisition of IBM’s x86-based server business catapults it into the number 3 spot in the global server market, behind Hewlett-Packard (HPQ) and Dell.