IBM to Split Into Two Public Companies; Arvind Krishna Quoted

IBM to Split Into Two Public Companies; Arvind Krishna Quoted

IBM (NYSE: IBM) will spin off its managed infrastructure services unit into a public company in a move to focus on its growth strategy for hybrid cloud and advance artificial intelligence capabilities.

IBM said Thursday it expects the separation to be completed by the end of 2021 through a tax-free transaction, subject to approval by IBM’s board of directors and other customary closing conditions.

The spunoff company will operate under a new name and will focus on providing infrastructure modernization support, services management, network services, hosting and multicloud management support to clients. It will operate with more than 4,600 customers in 115 countries and a backlog of $60B.

"Client buying needs for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating. Now is the right time to create two market-leading companies focused on what they do best,” said IBM CEO Arvind Krishna.

Krishna said the new company will focus on infrastructure design and modernization, while IBM will focus on open hybrid cloud platform and AI capabilities.

Under a new operating model, IBM will continue to advance innovation in hardware and shared services consolidation, streamline geographic model and update its go-to-market structure to better support customers.

J.P. Morgan Securities and Lazard act as financial advisers in the transaction while Paul, Weiss, Rifkind, Wharton & Garrison serves as legal adviser.

The announcement came more than a year after IBM closed its acquisition of Red Hat.

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