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Lenovo to close acquisition of IBM's x86 server business

Staff writer |
Lenovo and IBM announced that conditions for Lenovo's acquisition of IBM's x86 server business have been satisfied and the parties anticipate they will begin closing the transaction effective on October 1, 2014.

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The acquisition will make Lenovo the third-largest player in the $42.1 billion global x86 server market.

Lenovo is acquiring 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. IBM will retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, PureApplication and PureData appliances.

The agreement builds upon a strong history of collaboration that began in 2005 when Lenovo acquired IBM's PC business, including the ThinkPad line of PCs. Lenovo's pending acquisition of Motorola Mobility from Google will make it the world's third-largest smartphone maker, while further strengthening its position as a top-three maker of smart connected devices – PCs, tablets and smartphones.

As described in the January announcement of Lenovo's acquisition of IBM's x86 server business, Lenovo and IBM have also established a strategic alliance where Lenovo will serve as an Original Equipment Manufacturer (OEM) to IBM and resell selected products from IBM's industry-leading storage and software portfolio, including IBM's entry and midrange Storwize storage product family, Linear Tape Open (LTO) products, and elements of IBM's system software portfolio, including Smart Cloud, General Parallel File System and Platform Computing solutions.

This strategic alliance means Lenovo can now offer these products as part of a more comprehensive enterprise IT solution, allowing it to support a greater range of customer needs in data centers.

Lenovo is buying IBM's x86 server business intact and is committed to following the IBM x86 product roadmap, including Flex and x86-based PureFlex integrated systems. Lenovo will continue to drive innovation in these products. As previously disclosed, upon close, IBM will continue to provide maintenance delivery on Lenovo's behalf for an extended period of time, so customers will experience a seamless transition with no change in their maintenance support.

The global team of the IBM x86 server business will be organized under Lenovo's Enterprise Business Group. Adalio Sanchez led the x86 server business at IBM and will continue in this capacity at Lenovo, as senior vice president of Enterprise Systems, reporting to Gerry Smith.

The purchase price is approximately $2.1 billion. Approximately $1.8 billion will be paid in cash at closing after estimated adjustments and approximately $280 million will be paid in Lenovo stock, based on the closing price of Lenovo's stock on September 26, 2014. The transaction satisfied regulatory requirements and conditions, including clearance by the Committee on Foreign Investment in the United States (CFIUS), the European Commission and the Chinese Ministry of Commerce.

The transition will begin Wednesday in countries that are part of the initial closing, which includes most major markets. The transaction is expected to close in most other countries later this year, with the few remaining countries following in early 2015.


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