IBM has announced plans to divide itself into two public companies in 2021.
In a press statement, the Armonk-headquartered company said it is creating a new company that “will immediately be the world’s leading managed infrastructure services provider,” with relationships involving more than 4,600 clients in 115 countries, “including more than 75% of the Fortune 100, a backlog of $60 billion, and more than twice the scale of its nearest competitor.”
The new company”™s name and leadership structure were not immediately announced nor has an official launch date been set.
Separate from the new entity, IBM will concentrate on cloud computing and artificial intelligence solutions. The company stated that the newly realigned operation will migrate “from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions.” IBM added that more than 50% of the portfolio in this new version will consist of recurring revenues.
IBM also noted that pending regulatory approval, the division of its operations “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.”
IBM Executive Chairwoman Ginni Rometty, who is retiring at the end of this year, viewed the division of the company as a bold next chapter, with each entity capitalizing on their respective strengths.
“We have positioned IBM for the new era of hybrid cloud,” she said. “Our multiyear 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 unrivaled expertise in complex and mission-critical infrastructure work.”
As a result of separating the company into two parts, Rometty stated the result will be “greater value, increased innovation, and faster execution for our clients.”
