Lenovo makes some of the best computers in the world. Its award winning ThinkPad is a great product demonstrating that, its business is steadily growing abroad and at home. China’s Lenovo Group has made a bid, according to Bloomberg, to “buy the low-end server business of International Business Machines Corp.” As it is, the U.S. Government may perceive that this is a critical security issue and they may slow or even stop this deal from happening.
While Beijing-based Lenovo is likely to pay approximately $2.5 billion for the IBM unit, national security may be an issue that could hamper the deal’s prospects. All foreign investments are reviewed by the heads of several agencies including the Department of Commerce, the Defense department, Homeland Security and the Justice department along with others. To be clear, when any international firm attempts to buy a United States business there is a review by the Committee on Foreign Investments in the United States.
The unit involved in the sale, which may happen produces servers. Because many government agencies have sensitive information that will be used by the same devices, or even near the locations of military bases, the government holds this deal under scrutiny.
Counsel Vigdor of Vinson & Elkins commented, “The government has been very concerned about having foreign companies located near sensitive U.S. government installations because it may foster, facilitate or enhance their cyber monitoring or cyber disruption techniques.” A counsel from Alston & Bird LLP noted, “If Congress is holding hearings on the sale of a sausage company – Smithfield – they’re [definitely] going to hold hearings on the sale of a component of IBM.”
