IBM Planning to Set Up New Subsidiary : Industry: A buyout firm will be the majority owner of its typewriter and keyboard operations.

From Associated Press

Computer giant IBM said today that it will form a new subsidiary for its U.S. typewriter, keyboard and some printer businesses and that it intends for the buyout firm Clayton & Dubilier Inc. to become the unit’s majority owner.

The new U.S. company, made up mainly of IBM’s information products business operations in Lexington, Ky., and Boulder, Colo., is expected to reduce the current work force by 1,200. By the end of the year, the company will have 3,500 to 4,000 employees, IBM said.

The reductions envisioned will be accomplished through a program of voluntary resignation and early retirement, IBM said.


The formation of the new company is part of IBM’s strategy to sharpen its focus to concentrate on its computer and software business.

In an announcement from its Armonk, N.Y., headquarters, IBM said a plan is being studied to include the remainder of its worldwide information products business in the alliance with Clayton & Dubilier.

The announcement did not contain any financial details of the planned arrangements with Clayton & Dubilier. Published reports have estimated that a buyout of the IBM businesses could cost about $2.5 billion.

IBM spokesman Glenn Rossman said negotiations on a final agreement are expected to conclude by the end of the year. Until then, no information will be disclosed on how much Clayton & Dubilier will pay IBM or what size stake it will acquire, he said.

IBM Vice President Marvin L. Mann will become the chief executive officer of the new company.

Mann said making the information products operation a stand-alone business will enable it to concentrate its resources on expanding sales.


Clayton & Dubilier Chairman Martin H. Dubilier said: “Our intention would be to build on IBM’s reputation for quality and performance, while developing more aggressive long-term growth strategies for new business.”

Clayton & Dubilier has had experience in businesses at the low end of technology. Since the firm was formed in 1978, it has made 15 acquisitions with combined sales of $7.5 billion.

The New York-based buyout firm has made it a policy to avoid unfriendly maneuvers, preferring to work in partnership with the management of the businesses it acquires.