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IBM buys out GSA partners

IBM buys out GSA partners

IBM has announced it will acquire all of Lend Lease and Telstra's shares in the IBM Global Services (IBM GSA) Australia joint venture.

Under the terms of the transaction, IBM will pay Lend Lease $160 million in two equal parts (one now and the rest within a year) and Telstra $153.5 million, for their stake in the joint venture agreement.

Reaffirming that its investment in IBM GSA was "non core", Lend Lease chief executive, Greg Clarke, said the company had exited the joint venture.

IBM and property development firm, Lend Lease, formed the joint venture - then called ISSC (Integrated Systems and Services Corporation) - in 1994. It was renamed when Telstra became a partner in 1997.

The three companies said IBM GSA's change of ownership was driven by the companies' "changing business priorities".

Telstra's CFO, David Moffatt, said: "The sale is a key of [transforming] 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."

IBM GSA's general manager, Brendon Riley, said that acquiring full ownership would allow IBM to enhance the services it provides to customers.

The company would "also be able to simplify [its] internal structure and processes to provide more flexible solutions to customers", Riley said.

IBM GSA will right-size the business by integrating its two consulting divisions, BCS and BIS. This would solidify IBM Business Consulting Services' position as Australia's largest business consulting practice.

IBM GSA employs about 8000 staff.

The sale of IBM GSA's shares is expected to be completed in September and is subject to approval from the Foreign Investment Review Board.

It will continue operating as a part of IBM's Global Services organisation when the deal is complete.


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