Lenovo makes $2.3 billion play for IBM’s x86 server business

Formal agreement between Lenovo and IBM ends almost a year of rumors.

Lenovo and IBM announced Thursday that the two companies had formally entered in to an agreement for IBM’s x86 server business.

“This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy,” Lenovo CEO Yang Yuanqing said in a statement. *“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.”

According to a release by Lenovo, the deal is worth $2.3 billion and includes the System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex lines. IBM will retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.

This deal has been rumored to have been in the works for close to a year. Bloomberg first reported on the potential deal in April of 2013, only stating that Lenovo was interested in “parts” of IBM’s server business. In late January, rumors pivoted to state that Lenovo was interested in IBM’s “low end” server business and the company had affixed a price tag of around $2.5 billion for the division.

This deal is far from a certain thing, as it must be approved by EU and US regulators. Though Lenovo has put it a concerted effort to make itself more “American”, thus friendly to US regulators, as the case study of Huawei shows Sinophobia — sometimes the product of competitor lobbying — runs deep through the halls of power in Washington. *If this deal is to go through, it faces an uphill battle.



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