$IBM to divide into two companies in strategy overhaul
The computing giant said a new company, centred on its legacy IT infrastructure business, will be unveiled next year and spun out from the existing firm
International Business Machines Corp (NYSE:IBM) has said it will split itself into two publicly-listed companies as part of an effort to shift towards its higher margin divisions such as cloud computing and artificial intelligence (AI).
In an announcement on Thursday, the computing giant said a new company, centred on legacy IT infrastructure, will be unveiled next year and spun out from the existing firm, a process that is expected to cost around US$5bn.
IT infrastructure, while making up around a quarter of the company’s revenues, is widely considered to be a key drag on the growth of the company’s other divisions.
The divestment strategy is spearheaded by IBM’s chief executive Arvind Krishna, who orchestrated the company’s acquisition of cloud computing firm Red Hat in 2019 for US$34bn.
It also marks an attempt by IBM to muscle in on the burgeoning cloud computing market, which is currently dominated by fellow tech giants Microsoft Corp (NYSE:MSFT) and Amazon Inc (NASDAQ:AMZN).
Meanwhile, the new spin out firm, currently dubbed NewCo, will receive a permanent name next year and is expected to have around 90,000 employees at its debut.
MOSCOW (Reuters) - The brand of online Russian bank Tinkoff {$TCS} will live on despite its proposed sale to technology giant Yandex {$YNDX}, the bank's founder said on Wednesday, reiterating his pledge to stay with the business.
TCS Group , the parent company of Tinkoff, is in talks to sell the bank to internet group Yandex for $5.48 billion in a deal seen as largely positive for both companies.
Oleg Tinkov, the founder of TCS Group who has been battling acute leukaemia and had a bone marrow transplant in July, said that nothing would change for Tinkoff clients who would only benefit from the deal.
"This is not a sale, but rather a merger," Tinkov posted on his Instagram account.
Analysts agree that synergies are on the table should Tinkoff become part of Yandex's stable of technological services, including data and product offering.
The rationale for Tinkoff Bank is to build into Yandex's digital ecosystem with access to its more than 60 million unique users - potential Tinkoff Bank clients, said Alfa Bank in a note.
Tinkoff is currently the world's largest online-only bank with more than 10 million customers across Russia.
"We think the deal is positive for TCS business although minority shareholders should fight for a higher price," analysts at Renaissance Capital said, adding that TCS' capitalisation now stands at around a quarter of Yandex's.
The proposed price for the deal, a cash and share consideration worth $27.64 per Tinkoff share, represents an 8% premium to Tinkoff's GDR price as of Sept. 21.
The deal announcement pushed Yandex shares as much as 15% higher on Wednesday but caused a sell-off in TCS GDR's in Moscow. In London, TCS GDRs were up 5.8% at $27.50 per piece.
The proposed deal nonetheless brings challenges, exposing Yandex to the retail lending sector and requiring a boost to the tech group's management, Renaissance Capital said.
"Credit risks of the banking business will be added to Yandex's general business risk profile," BCS Brokerage said.
The deal is also subject to shareholder approval.
"The scenario in which a significant part of TCS's minority shareholders would not tender their shares and keep TCS a listed company is likely," said VTB Capital analysts.