Lenovo announces acquisition of IBM’s x86 server business for US$2.3 billion

Long-time collaborators Lenovo and IBM have entered into a definitive agreement within which Lenovo, the largest PC maker in the world, expects to acquire IBM’s x86 server business for approximately US$2.3 billion. The agreement builds upon a longstanding collaboration that began in 2005 when Lenovo acquired IBM’s PC business, which included the then-IBM ThinkPad line of PCs. 

IBM System x and PureFlex General Manager Adalio Sanchez speaking at an IBM event in Beijing on January 16, 2014 to debut the company's latest x86-based servers. IBM has since announced plans for Lenovo to acquire IBM's x86 server business for US$2.3 billion. Source: IBM.

 “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.”
 
“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,” said Steve Mills, Senior Vice President and Group Executive, IBM Software and Systems.

IBM's x86 server business includes the System x, BladeCenter and Flex System blade servers and switches, the x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, plus blade networking and maintenance operations. 

Lenovo and IBM also announced a complementary strategic relationship which will include a global OEM and reseller agreement for sales of IBM’s industry-leading entry and midrange Storwize disk storage systems, tape storage systems, General Parallel File System software, SmartCloud Entry offering, and elements of IBM’s system software portfolio, including Systems Director and Platform Computing solutions.
 
The transaction is subject to the satisfaction of  regulatory requirements, customary closing conditions and any other needed approvals. Subsequent local closings will occur subject to similar conditions, agreements and the information and consultation process in applicable countries. While the transaction is being completed, both companies expect no change in their independent, existing server operations, including customer service and product availability.

After the closing of the transaction, Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time. 

Approximately 7,500 IBM employees around the world, including those based at major locations such as Shanghai, Shenzhen and Taipei, are expected to be offered employment by Lenovo. 

IBM is a leading developer of software products for x86 servers, and will continue to evolve its Windows and Linux software portfolio for the x86 platform. It will retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.

This agreement follows recent announcements by IBM that it will invest more than US$1 billion in the new IBM Watson Group, and US$1.2 billion to expand its global cloud computing footprint to 40 data centres worldwide in 15 countries across five continents.