IBM says $2.3 bln server sale gets regulator approval


(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)