IBM to split into two companies next year

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IBM announced yesterday that it will accelerate its hybrid cloud growth strategy to drive digital transformation for its clients.

Additionally, IBM will separate the Managed Infrastructure Services unit of its Global Technology Services division into a new public company – NewCo.

In a statement, IBM says 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.

“IBM is laser-focused on the $1 trillion hybrid cloud opportunity,” says Arvind Krishna, IBM chief executive officer.

“Client buying needs for application and infrastructure services are diverging, while adoption of our hybrid cloud platform is accelerating. Now is the right time to create two market-leading companies focused on what they do best.

“IBM will focus on its open hybrid cloud platform and AI capabilities. NewCo will have greater agility to design, run and modernise the infrastructure of the world’s most important organisations. Both companies will be on an improved growth trajectory with greater ability to partner and capture new opportunities – creating value for clients and shareholders.”

“We have positioned IBM for the new era of hybrid cloud,” says Ginni Rometty, IBM executive chairman. “Our multi-year transformation created the foundation for the open hybrid cloud platform, which we then accelerated with the acquisition of Red Hat.

“At the same time, our managed infrastructure services business has established itself as the industry leader, with unrivalled expertise in complex and mission-critical infrastructure work. As two independent companies, IBM and NewCo will capitalise on their respective strengths. IBM will accelerate clients' digital transformation journeys, and NewCo will accelerate clients' infrastructure modernisation efforts. This focus will result in greater value, increased innovation, and faster execution for our clients."

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