Competition Commission of India (CCI) has granted deemed approval to IBM Corp. for an internal restructure that covers its India business, under a fast-track clearance provision.
An official statement from the competition watchdog said the transaction notified by two new companies set up as part of IBM’s internal reorganization—Kyndryl Holdings LLC and Grand Ocean Managed Infrastructure Services Pvt. Ltd—has been approved.
IBM’s international corporate reorganization seeks to spin off its global managed infrastructure services (MIS) into a separate business. CCI said the target structure will be achieved by a separation of its MIS Business into the newly incorporated companies Kyndryl Holdings and Grand Ocean Managed Infrastructure Services, the acquirers.
These two entities are currently not engaged in any business activity and have been incorporated only to implement the proposed deal. Post the transaction, the acquirers will house and operate IBM’s MIS business.
IBM’s MIS business in India is currently housed in Network Solutions Pvt. Ltd. and IBM India, which are indirect, wholly-owned subsidiaries of IBM Corp.
CCI did not mention any modifications to the transaction. While clearing corporate transactions, competition regulators are free to suggest modifications to the deal if they find any appreciable adverse effect on competition in the market because of the deal.
IBM had announced last October that the separation of its global technology services division’s MIS business into two companies, each with strategic focus and flexibility, will be tax-free and will be completed by end of 2021.
IBM said then that the reorganization will enable it to focus on its open hybrid cloud platform, which represents a $1 trillion market opportunity. On the other hand, the hived off business, which has relationships with more than 4,600 technology-intensive clients in 115 countries, will be entirely focused on managing and modernizing client-owned infrastructure, a $500-billion market opportunity.