Lenovo’s IBM Deal Has Sparked National Security Concerns

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Before Lenovo can acquire an old server unit from International Business Machines Corp. (NYSE:IBM), the company must first prove to the U.S. government that the business won’t be used to tap into U.S. government secrets and infrastructure, Bloomberg reports.

Many U.S. government agencies, including the Pentagon and the FBI, buy their servers from IBM, along with some of the country’s largest telecommunications companies, according to sources who spoke with Bloomberg said Friday. Verizon Wireless, AT&T, and Sprint are among national telecom companies that buy IBM servers.

As a result, an interagency group called the Committee on Foreign Investment in the U.S., which is in charge of investigating the potential national security risks involved in foreign acquisitions of domestic companies, will be placing Lenovo under very close scrutiny in the coming weeks.

The investigation doesn’t come as much of a surprise to those familiar with the industry; reports issued in January by Bloomberg and The Wall Street Journal predicted that Lenovo’s then-recent acquisition would spark a government investigation. Lenovo is also hoping to acquire Motorola, another purchase that is likely to require scrutiny.

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