Lenovo-IBM server business deal gets CCI green signal

NEW DELHI: Global technology major Lenovo's $ 2.3 billion deal with IBM to acquire the US-based company's low-end server business has received approval from fair trade watchdog CCI.

The proposed deal, one of the biggest acquisitions by a Chinese firm in the technology space, involves Lenovo Group acquiring x86 server business of technology giant IBM.

The deal "is not likely to have appreciable adverse effect on competition in India", the Competition Commission of India (CCI) has ruled.

The proposed transaction also includes the transfer of assets, contracts and employees associated with IBM's x86 server business.

In an order dated March 20, CCI said that "Lenovo is not present in the server market in India and through the proposed combination, Lenovo will enter as a competitor in the already competitive and dynamic server market in India".

"There is no horizontal overlap between Lenovo and IBM in the market of x86 server business in India," it added.

The fair trade regulator said post-deal, IBM would continue to provide maintenance services for the x86 server business on Lenovo's behalf for a limited transitional period to ensure continuity and smooth transition.

In January, Lenovo and IBM entered into a definitive agreement wherein Lenovo would acquire IBM x86 server business for approximately $ 2.3 billion, of which $ 2 billion will be paid in cash and the balance in Lenovo stock.

Lenovo, a company incorporated in Hong Kong, is engaged in the business of personal computers, tablets, smartphones, servers and storage and is present in India through its subsidiary, Lenovo (India) Private Ltd.

IBM is a multinational technology major which manufactures and markets information technology related hardware, software services.

Lenovo had filed a notice seeking CCI approval on February 24 following which the regulator had asked the company to remove certain defects and provide information/documents by March 7, 2014. After seeking extension of time, Lenovo had filed its reply on March 10, 2014.