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Thursday, October 8, 2020

IBM (IBM) to spin off legacy infrastructure management biz

  • The move was a continuation of the strategy the company began to put in place when it bought Red Hat in 2018 for  $34 billion. That purchase signaled a shift to a hybrid-cloud vision, where some of your infrastructure lives on-premises and some in the cloud -- with Red Hat helping to manage it all. 

IBM to accelerate hybrid cloud growth strategy and execute spin-off of market-leading managed infrastructure services unit; provides in line Q3 guidance 

  • Co announces it will accelerate its hybrid cloud growth strategy to drive digital transformations for its clients. Additionally, IBM will separate its Managed Infrastructure Services unit of its Global Technology Services division into a new public company ("NewCo"). This creates two industry-leading companies, each with strategic focus and flexibility to drive client and shareholder value.
  • The separation is expected to be achieved as a tax-free spin-off to IBM shareholders, and completed by the end of 2021.
  • The proposed separation is expected to be effected through a pro-rata spin-off to IBM shareowners that will be tax-free for U.S. federal income tax purposes. The transaction is subject to customary closing conditions, including Form 10 registration with the U.S. Securities and Exchange Commission, receipt of a tax opinion from counsel, and final approval by IBM's Board of Directors. The separation is currently expected to be completed by the end of 2021.
  • Co issues in-line guidance for Q3 (Sep), sees EPS of $2.58 vs. $2.58 S&P Capital IQ Consensus; sees Q3 (Sep) revs of $17.6 bln vs. $17.56 bln S&P Capital IQ Consensus.
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