IBM buys stakes in Aussie services unit

Big Blue plans to acquire the minority shareholdings in IBM Global Services Australia for a combined total of $201.09 million.

IBM and shareholders Lend Lease and Telstra said in a joint statement that the transaction--which would entail the payment of $102.63 million to Lend Lease and $98.46 million to Telstra--would be concluded by early September, pending an assessment by Australia's Foreign Investment Review Board.

Lend Lease is to be paid its amount in two equal installments--one now and the other in a year.

Big Blue, Telstra and Lend Lease said "the changing business priorities of the three companies" are behind their decision.

Research company IDC describes IBM Global Services Australia (IBM GSA) as the leading provider of business consulting services in the Australian marketplace, with a 15 percent market share.

IBM and Lend Lease originally formed the joint venture, then called ISSC--Integrated Systems and Services Corporation--in 1994, with the renaming undertaken when Telstra became a partner in 1997.

Telstra owned a 22.6 percent stake in GSA and Lend Lease a 23 percent share, with Big Blue holding the remaining 54.4 percent.

Lend Lease said in a separate statement that it had for a long time viewed the GSA investment as "noncore," with the company's board saying in a statement that it was "very pleased" with the outcome of the sale.

Brendon Riley, chief executive of GSA, said in the joint statement that the acquisition would allow IBM to simplify its internal structure and processes "and provide more flexible solutions to customers."

"We will integrate our two consulting organizations, BCS (Business Consulting Services) and BIS (Business Innovation Services), making the combined IBM Business Consulting Services the largest business consulting practice in Australia," Riley said.

ZDNet Australia's Iain Ferguson reported from Sydney.