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Lenovo set to close $2.1 billion deal for IBM’s x86 server division

Mon 29 Sep 2014

Lenovo Group Ltd. has announced the final stage of its $2.1bn acquisition of IBM’s x86 server division, which will fall into the portfolio of the Beijing-based tech manufacturer on Wednesday October 1st.

The deal has gone through $200,000 lower than originally estimated in January due to fluctuations in inventory valuation and deferred revenue liability, with $1.8bn payable in cash and the rest in Lenovo stock, based on last Friday’s closing price, the company stated.

Products included in the deal include BladeCenter, NeXtScale and iDataPlex servers, x86-based Flex integrated systems and System x.

CEO and chairman of Lenovo Yang Yuanqing said: “By combining Lenovo’s global reach, efficiency and operational excellence with IBM’s legendary quality, innovation and service, I am confident that we will have competitive advantages to help us drive profitable growth and build Lenovo into a global enterprise leader.”

The deal is set to push Lenovo into the top 3 IBM x86 companies in the world, whilst its forthcoming acquisition of Google’s Motorola Mobility will promote the company into third-largest smartphone manufacturer worldwide.

Yuanqing made additional comments in a subsequent press conference, outlining Lenovo’s plan to reach $5bn in revenue within one year, and promising a smooth integration of the existing IBM talent-pool into the company’s infrastructure.

Executive VP of Lenovo Group Gerry Smith added: “The new team from IBM can look forward to an exciting road ahead. With close, Lenovo will be number three in the x86 market. Getting to number one will be a challenge, but we are 110% committed to winning in the enterprise, just as in PCs.”

Smith compared the new x86 acquisition to Lenovo’s 2005 purchase of IBM’s PC division, including the ThinkPad range. He added: “The acquisition is a clear demonstration of the confidence we have earned based on our consistent track record as a responsible global investor and as a secure and reliable technology provider.”

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