Lenovo to finalise $2.1bn IBM x86 server business aquisition

Deal will see Lenovo become third largest player in x86 server market

Lenovo is to finalise the acquisition of IBM's x86 server business in a deal worth $2.1bn that will make Lenovo the third largest player in the $42.1bn global x86 server market.

Originally announced in January, it's anticipated that the deal will close as of October 1st and will see Lenovo acquire large swathes of IBM's x86 server catalogue, including 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, however, will retain control of its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, PureApplication and PureData appliances.

The deal doesn't represent the first time Lenovo have done business with IBM, with the former acquiring the latter's PC business in 2005.

"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," he continued.

"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," Yuanqing added.

IBM customers have been assured that despite the deal, they won't experience any disruption, with IBM set to continue to provide maintenance support for "an extended period of time".

Most of the $2.1bn price - $1.8bn of it - will be paid in cash, with the remainder in stock. The transaction satisfied regulatory requirements and conditions, gaining clearance from the Committee on Foreign Investment in the United States (CFIUS), the European Commission and the Chinese Ministry of Commerce.

"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," said Gerry Smith, executive vice president of Lenovo Group and president of Enterprise Business Group and Americas Group.

"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."

Employees and business operations will be transitioned over the next few months, with the aim of moving IBM employees across to Lenovo by the end of the financial year.