Lenovo To Close $2.1 Billion IBM Deal October 1, Will Become World's Third Largest Server Player

Lenovo is already the world's top PC maker in terms of shipments and sales, and once it closes the deal with IBM for its server division, the Chinese company will become the third largest player in the global x86 server market. No small deal, Lenovo is paying IBM $2.1 billion to increase its standing in a market that's worth $42.1 billion.

"With the close of the x86 acquisition, Lenovo will add a world-class business that extends our capabilities in enterprise hardware and services, immediately making us a strong number three in the global server market," said Yang Yuanqing, chairman and CEO of Lenovo. "Now, our priorities are to ensure a smooth integration and deliver a seamless transition for customers. 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."

Lenovo ThinkServer

These two companies are no strangers to making blockbuster deals with one another. Back in 2005, Lenovo acquired IBM's PC business, including the ThinkPad line of PCs. The two firms also have a close relationship outside of making acquisitions -- for example, once the server transaction goes through, Lenovo and IBM will form a strategic alliance in which Lenovo will serve as an OEM to IBM and resell selected products from IBM's storage and software portfolio.

The future of Lenovo looks bright. Having already risen to the top spot in worldwide PC sales, Lenovo will now look to increase its standing in the server market. It's also on track to become the world's third-largest smartphone maker once it completes its acquisition of Google's Motorola Mobility unit.

"Lenovo has big plans for the enterprise market. Over time, we will compete vigorously across every sector, using our manufacturing scale and operational excellence to repeat the success we have had with PCs," said Gerry Smith, executive vice president of Lenovo Group and president of Enterprise Business Group and Americas Group.

Lenovo's deal with IBM is expected to close on October 1, 2014.