Lenovo and IBM has 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. 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.
“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.”
Amar Babu, Managing Director, Lenovo India said, “India has always been a critical market for Lenovo. Since we acquired IBM’s PC business, our India growth has evolved significantly and we hope to repeat the same success with the x86 acquisition. The addition of x86 servers will play a key role in driving innovation in our PC business and in turn, Lenovo’s scale, efficiency and channel reach capabilities will further strengthen the 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, IBM Flash storage arrays 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.
The purchase price is approximately US$ 2.1 billion. Approximately US$ 1.8 billion will be paid in cash at closing after estimated adjustments and approximately US$ 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.