(Adds background on IBM and server business sale)
By Marina Lopes
Aug 15 (Reuters) - International Business Machines Corp
said on Friday that U.S. regulators had approved the
$2.3 billion sale of its low-end server business to Lenovo Group
Ltd, as the company continues its shift to more
profitable software and services like cloud computing and data
IBM has already divested $16 billion in annual revenue over
the past decade from low-margin businesses like personal
computers and printers.
The approval by the Committee on Foreign Investment in the
United States came despite CIFUS members' concern, first
reported by the Wall Street Journal earlier this year, that IBM
servers used in the Pentagon's networks could be accessed
remotely by Chinese spies and compromised.
Lenovo has been through the secretive CFIUS process three
times before and has won approval each time, according to a
source familiar with the process.
CFIUS, an interagency group chaired by the Treasury
Secretary, reviews deals that could bring U.S. businesses under
foreign ownership and is required by law to assess any
transaction involving a state-owned firm.
Lenovo said in a statement that it remains on track to close
the IBM server deal by the end of the year.
Analysts say Lenovo will likely find it easier than IBM to
sell the x86 servers to Chinese companies as Beijing tries to
localize its IT purchases in the wake of revelations about U.S.
(Reporting By Lehar Maan in Bangalore and Marina Lopes in
Washington D.C.; Editing by Maju Samuel and Tom Brown)