IBM to Spin Off Managed Infrastructure Services Unit to Accelerate Hybrid Cloud Growth

Paul, Weiss is advising IBM in the separation of the market-leading Managed Infrastructure Services unit of its Global Technology Services division into a new public company. The spin-off is part of IBM’s larger strategy to accelerate growth of its open hybrid cloud platform, which represents a $1 trillion market opportunity. The new company will be entirely focused on managing and modernizing client-owned infrastructures, a $500 billion market opportunity.

The proposed separation is expected to be achieved as a tax-free spin-off to IBM shareholders, and completed by the end of 2021, subject to customary closing conditions and approvals. The separation will facilitate IBM’s shift from a company with more than half of its revenues in services to one with a majority in high-value cloud software and solutions.

The Paul, Weiss team includes, among others, corporate partners Scott Barshay, Laura Turano, Steven Williams and John Kennedy, and counsel David Sobel and Frances Mi; tax partners Jeffrey Samuels and Scott Sontag and counsel Alyssa Wolpin; intellectual property partner Jonathan Ashtor; and employee benefits partner Lawrence Witdorchic and counsel Jarrett Hoffman.