Lenovo CEO upbeat over IBM deal prospects

Stalled server business acquisition expected to close by year-end, says Yang Yuanqing

Tags: IBM (www.ibm.com)Lenovo GroupMergers and acquisitionsUSA
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Lenovo CEO upbeat over IBM deal prospects Yang: The US government...and US Army are all our clients. There has been no issue and we will keep this tradition. (Getty Images)
By  Stephen McBride Published  July 2, 2014

Lenovo Group's CEO today said that the Chinese company's acquisition of IBM's low-end server business was expected to be completed by the end of the year, despite reports of the deal being stalled by US lawmakers over security concerns, Reuters reported.

Yang Yuanqing's comments were made at Lenovo's AGM in Hong Kong, where he also said that Lenovo's purchase of Google's loss-making Motorola Mobility unit would be completed by year-end.

Both deals are under review by US and Chinese regulators, but last week The Wall Street Journal reported that the Committee on Foreign Investment in the United States (CFIUS) was scrutinising the $2.3bn IBM transaction because of concerns that servers might be subject to remote tampering. IBM servers feature heavily in US critical infrastructure and in high-security facilities such as the Pentagon.

Both acquisitions are taking place in a climate of heightened mistrust between Washington and Beijing regarding Internet security. After US prosecutors issued indictments against five Chinese military officers in May, China responded with a number of actions that directly impacted the US technology sector, such as the banning of Microsoft Windows 8 on government computers and subjecting "foreign" companies' hardware to more stringent review. IBM was singled out, as its servers sit at the heart of the infrastructures of many Chinese banks.

Yang's confidence may stem from the fact that Lenovo already has direct business links with US military, as he mentioned prominently at the Hong Kong meeting.

"We hope to complete the two deals by year-end," he said. "The US government...and US Army are all our clients. There has been no issue and we will keep this tradition."

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