The Dutch government has blocked Kyndryl’s planned takeover of Solvinity over public interest and data sovereignty concerns. This signals potential hurdles for U.S.-based IT service providers pursuing European deals amid rising geopolitical tensions and scrutiny of foreign technology ownership.
New York-based Kyndryl, a global enterprise IT services provider, ranked No. 13 on the CRN 2026 Solution Provider 500, in November entered into an agreement to acquire Solvinity Group, which provides secure managed cloud platforms and services in the Netherlands. That deal was valued at about 100 million euros, or about $115 million.
Solvinity is currently the IT solution provider in charge of enhancing DigiD, the official digital identification used in the Netherlands for citizens looking to access services online. Solvinity has a contract to work on DigiD through August 2028, but the government is in the process of extending that another two years.
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Kyndryl’s plan to acquire Solvinity, which would not have included ownership of DigiD, was subject to review by the Dutch government, which in May announced via a letter to the country’s parliament that it would block the acquisition.
That statement, written in Dutch but translated by CRN via Google Translate, said the country’s Investment Assessment Office, or BTI, which is the supervisory authority under the Telecommunications Undesirable Control Act, concluded that the intended acquisition of Solvinity may pose a risk to the public interest and advised a complete prohibition of the acquisition.
It was the first time the Dutch government’s investment screening agency rejected a U.S. takeover, Reuters reported.
In response, Kyndryl on May 26 wrote in a statement on its website that it is extremely disappointed by the Netherlands government’s decision to prohibit Kyndryl’s acquisition of Solvinity.
“Since announcing the proposed transaction, Kyndryl has consistently engaged in good faith with relevant stakeholders across the Netherlands’ government,” the company wrote. “Despite this engagement and our long history of managing mission-critical operations in the Netherlands, the politicization of this process has overshadowed the clear and important benefits this transaction would have brought to Solvinity’s customers and Dutch citizens.
“Notwithstanding this outcome, our team will continue to support our customers in the Netherlands as they modernize legacy systems, keep pace with rapid advances in technology and do so securely and at scale. We will continue to bring our proprietary agentic AI methodologies to regulated and non-regulated customers across the Netherlands. Our team will, as they always have, operate with trust and dedication to the highest standards of mission-critical services, security, compliance, data protection and innovation.”
Kyndryl declined a CRN request for more information.
Solvinity declined to discuss the news with CRN. However, in a statement emailed to CRN, the company wrote: “Following the decision by the State Secretary of Economic Affairs and Climate Policy, on the advice of the BTI, not to approve the proposed acquisition of Solvinity Group B.V. by Kyndryl Netherlands, Solvinity emphasizes that it remains fully committed to providing safe, reliable, and high-quality IT services to its customers.
“Solvinity continues to engage in dialogue with the relevant authorities regarding the considerations made in the context of national security, digital autonomy, and the protection of Dutch critical infrastructure.
“With a strong focus on innovation, continuity, and digital resilience, Solvinity will continue to serve its customers and advance the further development of its services.”
Kyndryl already works with several government customers in Europe, including the Dutch Ministry of Defense. The value of Kyndryl’s Dutch military contract is worth about 4 billion euros, or $4.6 billion, according to The New York Times. Solvinity is currently owned by the British-based private equity firm Vitruvian Partners.
Geopolitical Tensions
The rejection of Kyndryl’s plan to acquire Solvinity comes at a time when geopolitical issues, particularly since the start of Donald Trump’s second term as president of the U.S., are increasingly impacting foreign relations.
Certain policy positions of the U.S., including a push by the Trump administration to take control of Greenland from Denmark and Trump’s criticisms of Europe and NATO, have in the last year strained relationships with European nations, including the Netherlands, which has traditionally been a close ally of the U.S.
At the same time, European countries have increasingly expressed concerns about reliance on U.S. technology, particularly when it comes to cloud technology. Reuters, for instance, reported on June 1 that 13 European cloud providers are working with European lawmakers and non-government organizations to back the European Commission’s push to reduce Europe’s dependence on U.S. technologies.
At the same time, European nations are concerned about data sovereignty, particularly in the face of the U.S. CLOUD (Clarifying Lawful Overseas Use of Data) Act of 2018, which allows the U.S. government to demand access to data stored in foreign data centers. The CLOUD Act has stirred concerns in Europe, which generally has stronger data privacy laws than the U.S.
The U.S. Embassy and Consulate General in the Netherlands in a statement said the U.S. and the Netherlands share one of the world’s strongest and most enduring partnerships, built on 250 years of shared values, innovation, and cooperation.
“We were disappointed by the Dutch government’s decision regarding the Kyndryl-Solvinity deal. We understand and respect the responsibility to safeguard critical infrastructure and protect citizens’ data. While we believe additional time for dialogue should have allowed for the identification of a path that would address legitimate concerns, we are committed to working closely with Dutch partners to protect both nations’ interests going forward.
“Our economic and technological partnership is a story of co-creation and mutual reliance, delivering real benefits on both sides of the Atlantic. Strong partnerships require rules of the road that are clear, fair, and reciprocal. They create an environment that attracts U.S. investments rather than turning them away. Our partnership will continue to thrive, but it is essential that we maintain our mutual commitment to shared prosperity and security,” the statement read.
A source familiar with the Dutch government’s confidential decision said the rejection of the planned acquisition is based on the fact that Kyndryl is headquartered in the U.S. The action by the Netherlands government could also be a sign of things to come for other U.S.-based solution providers looking to make acquisitions in Europe, the source said.
Kyndryl’s planned acquisition of Solvinity would have been only the second acquisition for Kyndryl since it acquired hybrid cloud services provider Skytap.
Cristian Anastasiu, managing partner at Excendio Advisors, a Grand Rapids, Mich.-based M&A advisor focused primarily on MSPs and other solution providers, told CRN that Solvinity works with government data, and the Dutch, like the Germans and other Europeans, are very big on confidentiality, as they should.
“The CLOUD Act, which requires U.S. companies to disclose data, that definitely led to the issues Kyndryl has here,” he said. “I think the test will be, what’s coming next? Is there a second example? Is it going to be a similar situation if we look at companies with healthcare or financial services data, which is really not directly government. That’s something I think still has to be explored. I don’t think we know this yet.”
This issue doesn’t impact only U.S. companies, Anastasiu said.
“This could be a signal for companies other than from the U.S., maybe some larger Asian companies, maybe Canadian, to not even try to approach European companies,” he said. “But definitely it’s a precedent.”
It used to be a badge of honor for a European company to be acquired by a U.S. company, Anastasiu said.
“So I think at the individual or company level, the interest and desire to be acquired by a U.S. company is going to continue,” he said. “But you have the government in between. Also, the European Union is a second layer of bureaucracy in Europe, and the U.S. or even the EU don’t have any decision power. The EU has a lot of directives, and they advise everybody in Europe to control their own data and infrastructure and data centers.”
Martin Wolf, founder and chairman of martinwolf, a Scottsdale, Ariz.-based mergers and acquisitions advisory firm focused on the midmarket IT industry, told CRN that Europeans in general have a legitimate concern over data privacy, but that data privacy laws there are holding European IT firms back from being able to compete with the U.S. and China.
“I’m not arguing they should change their policies to account,” Wolf said. “I’m just saying that because they have these policies, they are so far behind.”
European data privacy laws like GDPR (General Data Protection Regulation) are great in concept, Wolf said.
“But we’ll see what happens with [Solvinity], what happens with the economy, and so forth,” he said. “[Europe is] really at a disadvantage. They don’t want to compete, but everybody else around them is competing.”
Wolf said he would like to see more European channel companies consider being acquired to be more competitive. His company is getting ready to market a solution provider that makes about 20 million euros to a foreign buyer.
“The buyer will be out of the country, and they’re going to add and grow the business. That’s the optimal outcome. If we’re not successful finding a home for this company over time, it’ll atrophy, because it can’t compete. They make quite a bit of money, but they can’t make the investments necessary to stay current.”
David Harris assisted with this story.
