After more than 50 years in Ireland, the world’s oldest computer company has just got a facelift. Up until the end of last year, IBM’s Irish operations and dozens of subsidiaries around the world were mostly owned through IBM PDL Investments I Ltd (PDLI I), a holding company registered in Dublin and managed out of Amsterdam, where its immediate Dutch parent was based. 

A series of recent corporate filings in both countries show that they are now held through IBM Investments Ltd, a company also registered at IBM House in Ballsbridge and controlled by the same Dutch-based directors, Jeroen Nolden and Brendan Turnbull.

In December 2019, IBM PDL Investments III (PDLI III), the intermediary Irish holding subsidiary acting as the common parent to the group’s trading companies here and in many other countries, saw its ownership change in a series of transactions. Its shares were first transferred up the holding pyramid all the way to a Dutch parent, IBM PDL Investments BV. This Dutch company then merged into another one, IBM World Trade Investments BV. Finally, IBM World Trade Investments BV registered IBM Investments in Dublin and placed PDLI III and all its subsidiaries in this new Irish-based, Dutch-managed holding company.

At the end of August this year, IBM then appointed a Dutch liquidator to wind up PDLI I and II as well as another Irish holding company called IBM PDL Investments Ltd. Each had just a few thousand dollars left on their balance sheet, according to declarations filed in Ireland.

Back to square one? Not exactly. Brace yourself, it gets a bit complicated.

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Prior to this restructuring, the top Irish holding company PDLI I consolidated assets worth $92.7 billion, of which $82.8 billion was covered by equity. By contrast, its replacement IBM Investments has just filed accounts for its brief 2019 accounting year – the three weeks between its incorporation on December 9 and the end of that month, during which it received ownership of PDLI III and all its trading subsidiaries – and there was just $14.4 billion on its balance sheet, nearly half of which was now owed in liabilities.

Where did all the value in IBM’s Irish corporate maze go? We will never know exactly, as both PDLI I and its successor IBM Investments only ever filed consolidated accounts lumping together all their subsidiaries from Ireland to Singapore, with no granular detail available. However, there are clues.

On December 6, 2019, the day PDLI III embarked on its journey through the group’s Irish-Dutch structures, PDLI I (its indirect parent through PDLI II) filed a declaration reporting that its balance sheet had been reduced to $23.7 billion in assets and zero liabilities, adding:

“An amount of $23,658,859,710 of the accumulated profits of IBM PDL Investments I Limited (“the Company”) attributable to its shareholding in IBM PDL Investments II Limited (“PDLI II”) shall be treated in the Company’s financial statements as profits available for distribution by the Company notwithstanding that such amount may relate to accumulated profits for the period prior to the date on which the Company acquired its shareholding in PDLI II.”

The company adopted a special resolution in relation to the same eye-watering sum, authorising its directors to act “as may be required or desirable in order to treat the foregoing amounts of pre-acquisition profits of the Company as profits available for distribution”. The $23.7 billion distribution presumably took place earlier this year before the hollowed-out PDLI I was put in liquidation. The detail of this profit repatriation, including its taxation, will be difficult to track because the companies involved are now slated to disappear before they file annual accounts again. 

No more Chinese subsidiaries

Another reason behind the reduced size of the balance sheet consolidated by IBM in Ireland is to be found in the list of subsidiaries under the control of its top holding company in this country. The key difference between the old PDLI I and the new IBM Investments is that all Chinese subsidiaries are gone. There used to be seven under intermediary Irish ownership, with names suggesting a range of activities from procurement to engineering and global delivery – presumably a sizeable business.

In the end, when IBM Investments received control of its own set of subsidiaries through PDLI III at the end of last year (for free, as a capital contribution), the transaction added just $7.5 billion to the equity on its balance sheet. The value in all companies now held through Ireland came mostly from their intangible assets totalling $4.2 billion, and their $3.4 billion in consolidated cash reserves.

IBM Investments has 39 direct and indirect subsidiaries, compared with over 50 in the old PDLI I. Some of this is due to simple streamlining – for example, Irish subsidiary IBM International Holdings Finance Company Ltd was previously held through an intermediary Dutch company, which was recently merged away.

Some of IBM’s multi-billion Irish-based financing companies, meanwhile, remain outside the main holding structure for trading units. They, too, have seen significant restructuring in the past year.

Consider IBM GF International Treasury Company DAC, an Irish subsidiary of IBM’s Global Financing division. New accounts for 2019 show that the company reduced its capital by $13 billion, making the funds available for distribution. By the end of last year, it had paid out $10.7 billion of this in a dividend to its Dutch parent.

Then last month, the same company issued new shares worth $1.7 billion to a UK group company in exchange for the entire share capital of IBM International Treasury Services Unltd, an Irish-registered subsidiary previously held through British structures.

This leaves one new Irish subsidiary about which we know very little yet. IBM Technology Corporation Unltd was incorporated two days before Christmas last year and is the group’s only company here that is controlled directly from the US. It has yet to file accounts, but its name suggests that it may assume the role of an intellectual property vehicle. 

Further reading

Dell, IBM, HP, Analog and NCR: How hardware tech giants route their money through Ireland