Global Separation of IBM’s MIS business into a new public company (Kyndryl)

  • Deal
  • October 12, 2021

JSA advised International Business Machines Corporation (IBM) on the India leg of the global separation of the Managed Infrastructure Services (MIS) business of IBM’s Global Technology Services segment into a new public company, Kyndryl Holdings LLC (Kyndryl). In India, IBM’s MIS business was housed within IBM India Private Limited and Network Solutions Private Limited (both indirect wholly owned subsidiaries of IBM), which has been transferred to Kyndryl Solutions Private Limited, another indirect subsidiary of IBM (Kyndryl India) as on September 1, 2021 by way of:

  • a demerger from IBM India Private Limited through a scheme of arrangement under Sections 230 – 232 of the Companies Act, 2013 sanctioned by the National Company Law Tribunal, Bengaluru Bench (NCLT)
  • a business transfer / slump sale from Network Solutions Private Limited.

This was followed by a series of offshore share transfers (in the form of equity distributions and contributions) of Kyndryl’s shares inter se IBM and Kyndryl entities.

The MIS business in India is valued at about USD 600 million. Upon completion of regulatory processes, Kyndryl will spin off from IBM as a separate publicly traded company on a subsequent date, until which time, Kyndryl will remain an indirect subsidiary of IBM. The transaction entailed

  • completion of an NCLT process within a stringent timeline amidst various challenges
  • undertaking of a notification to the Competition Commission of India under the green channel route
  • advising on numerous complexities related to separation of the MIS business (which was intertwined with IBM’s retained businesses)
  • transfer of SEZ licenses in a timely manner.

Hogan Lovells acted as the international counsel and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as the US counsel to IBM on this transaction.

JSA Transaction Team Comprised Partner – Venkatesh Raman Prasad, Partner – Ronak Ajmera, Partner – Shivani Chugh, Senior Associate – Ankita Jain, Senior Associate – Sweta Singh, Associate – Ankit Srivastav, Associate – Ritesh Anand, and Senior Associate – Lipi Sarin.

JSA Litigation Team Comprised Partner – Dheeraj Nair, Partner – Prasanth VG, Principle Associate – Kumar Kislay, Senior Associate – Sindhu S. Rao, Associate – Avni Sharma, and Associate – Ayyanna Sharanappa.

JSA Competition Team Comprised Partner – Vaibhav Choukse, Principal Associate – Ela Bali, Senior Associate – Nripi Jolly.

JSA Tax Team Comprised Partner – Kumarmanglam Vijay, Partner – Manish Mishra, Senior Associate – Shikha Parmar, Associate – Shiv Singhal.

Additionally, the following JSA team members advised on stamp duty issues and also assisted with signing/closing related processes:

Partner – Gerald Manoharan, Partner – Manuel Jose, Senior Associate – Soujanya Gollapudi.