Lenovo to Acquire IBM Low-End Server Business for $2.3 Billion

Lenovo on Thursday announced it has entered into a definitive agreement to acquire IBM's x86-based server business for $2.3 billion. The deal includes System x, BladeCenter, and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers, and associated software, blade networking, and maintenance operations.

"This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy," said Yang Yuanqing, chairman and CEO, Lenovo. "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."

Flex Systems V7000
IBM's lower end server products, such as this Flex System V7000 Storage Node, are changing hands to Lenovo.

Lenovo said it plans to offer employment to 7,500 IBM employees around the globe, including those based at major locations such as Raleigh, Shanghai, Shenzhen, and Taipei. As for IBM, the deal frees the company up to focus on and develop its Windows and Linux software portfolio for the x86 platform.

This deal has been a long time coming. Lenovo reportedly tried to buy IBM's low-end server business last year, but IBM's asking price of $4 billion to $6 billion was well above what the OEM had in mind, which was more in the range of $2.5 billion. It was reported earlier this week that talks had resumed between the two companies, so this deal doesn't come as a surprise, except for maybe the price. Analysts predicted the deal would get done for somewhere between $2.5 billion and $3 billion.