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By | Paul Kunert 2nd July 2014 13:58

Lenovo: Our IBM deal will definitely go through this year. Honest

US gov, check our history - we're squeaky clean on securo-matters

Lenovo's big boss expects its $2.3bn gobble of IBM's ailing volume server biz to go through by the end of the year in spite of the US government's continued scrutiny of the deal amid concerns over security.

Both firms went public about the mega borg in January, which includes the System x, BladeCentre and Flex System blades and switches, x86-based Flex integrated systems, NeXtScale and iFataPlex servers.

The transaction is subject to regulatory approval from the Committee of Foreign Investment in the US. Due to the public sector contracts IBM held - including ones for the US military - the government is looking at the deal closely.

At Lenovo's shareholder meeting in Hong Kong, CEO Yang Yanqing said "there is no change to the plan", adding "we remain on track to close the investment by the end of the year".

Almost a decade ago Lenovo took over IBM's PC division. Following a long period of instability the Chinese firm finally got its act together, swiping leadership of the global market from HP last year.

Yanqing did not open up about US government's specific snooping concerns but said: "If you look at our history, with domestic and overseas clients, there has never been any issue regarding security. "

IBM's Intel-based server lines have hit the skids, failing to grow for the past two years, while rivals have sought to magnify any uncertainty among Big Blue's channel and customer bases.

HP told us last month some 600 customers had defected to it from IBM, though we have no way of confirming if this was related to the sale or not.

Bill Veghte, exec veep for HP's Enterprise Group, told us the Lenovo buyout will not be well received by channel partners who were making money by selling IBM servers and attaching its storage in deals.

"I'm going to show up with that same set of capabilities across a much broader product line than what IBM afforded," he said.

Channel partners like simplicity when working with vendors, but may need to engage both Lenovo and IBM to cover sever and storage bases, with both coughing margin.

"This involves all the thing that partners tell me they don't want; they don't want two different partner programme; they don't want margin stacking between vendors they want one margin profile." ®

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