Computer Business Review

Lenovo to buy IBM's server business for $2.3bn

by Kate Heslop| 23 January 2014

This stands as the largest tech acquisition by a Chinese company.

PC maker Lenovo has agreed to buy IBM's x86 server hardware business and related maintenance services for $2.3bn.

The acquisition includes System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers.

IBM will keep its System z mainframes, Power Systems, Storage Systems, Power-based flex servers, and PureApplication and PureData appliances.

Ahead of the announcement, trading in shares of Lenovo was brought to a stop on Thursday morning in the Hong Kong stock exchange.

Yang Yuanqing, chairman and CEO, Lenovo commented on the acquisition: "This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy. With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long-term, just as we have done with our worldwide PC business."

In a statement, Lenovo said it will pay $2.07bn in cash and the rest with Lenovo stock.

It is alleged that approximately 7,500 IBM employees will be offered employment at Lenovo.

Steve Mills, senior VP and group executive, IBM Software and Systems, said: "This divestiture allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data and cloud. IBM has a proven record of innovation and transformation, which has enabled us to create solutions that are highly valued by our clients."

The acquisition follows recent announcements by IBM that it will invest $1.2bn to expand its global cloud computing growth with 40 data centres in 15 countries, and an investment of more than $1bn in the new IBM Watson Group.

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