IBM assumes total control of GSA
IBM assumes total control of GSA
IBM has confirmed that it has bought out joint venture partners' Telstra and Lend Lease shareholding in IBM Global Services Australia for a total of $313.5 million, in turn assuming sole control of the operation.
IBM, which currently holds 54.4 percent of IBM GSA, will pay Lend Lease $160 million, paid in two equal tranches – one now and one a year from now, for its 22.6 percent stake, and Telstra $153.5 million for its 23 percent shareholding in the joint venture.
The transaction is subject to review by the Foreign Investment Review Board, and is expected to be finalised by early September. When the transaction is complete, IBM GSA will continue to operate as a part of IBM’s Global Services organisation.
A statement issued by IBM said the change of ownership in IBM GSA "reflects the changing business priorities of the three companies." IBM and Lend Lease formed the joint venture, then called ISSC (Integrated Systems and Services Corporation) in 1994, and it was renamed when Telstra became a partner in 1997.
Lend Lease CEO Greg Clarke reiterated IBM's sentiments on the deal.
"We have made it clear for some time that our investment in IBM GSA was non-core, so it is appropriate that we are exiting the joint venture," he said.
Meanwhile, Telstra's CFO, David Moffatt said that Telstra was happy with the terms of the deal, adding that it would allow the telco to focus on other areas.
"The sale is a key part of the transformation of Telstra's IT processes which focus on aligning the interests of key vendors with Telstra's vision which is to improve its internal IT skills base."
Brendon Riley, GM of IBM Australia’s Global Services organisation, said that acquiring full ownership would allow IBM to "improve our ability to respond rapidly to changes in the marketplace and anticipate the emerging needs of our customers.
“We will also be able to simplify our internal structure and processes and provide more flexible solutions to our customers. We will integrate our two consulting organisations, BCS and BIS, making the combined IBM Business Consulting Services the largest business consulting practice in Australia," he said.
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