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IBM to sell server business to China's Lenovo for $2.3 bn

IBM to sell server business to Chinas Lenovo for $2.3 bn

New York: US technology giant IBM Thursday announced a definitive agreement to sell its low-end server business to China's Lenovo for roughly $2.3 billion.

IBM will receive $2 billion in cash and the rest of the payment in Lenovo stock, the US company said in a press release.

In the deal, Lenovo plans to acquire IBM's x86 server business, which "includes 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 said.

IBM said it will retain other high-end server, storage and mainframe business lines, as well as its PureApplication and PureData appliances.

Big Blue also will continue to develop and evolve its Windows and Linux software portfolio for the x86 platform, the company said.

"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," Steve Mills, IBM Software and Systems' senior vice president and group executive, was quoted as saying.

The transaction is subject to regulatory approval.

Approximately 7,500 IBM employees are expected to be offered employment by Lenovo as part of the deal, which is the latest step in a business relationship that began in 2005 when the Chinese company acquired IBM's ThinkPad PC business.

Lenovo chairman and CEO Yang Yuanging said, "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."


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