Date
21 October 2017

Lenovo to acquire IBM server business at US$2.3 bln, filing says

Lenovo Group Ltd. (00992.HK) has proposed to acquire the x86 server hardware and related maintenance service business of International Business Machines Corp. (IBM) for US$2.3 billion, the company said in a regulatory filing Thursday. The Chinese PC maker will pay US$2.07 billion in cash plus 182 million of its shares.

Lenovo hopes to maximize end-to-end capabilities to serve enterprise customers and explore new growth segments in the enterprise hardware market by acquiring x86 server, the filing said. The acquisition offers assets and strategic relationships with IBM beyond servers, including areas such as storage, networking, software and services.

The company expects to see rising demand for more computing power and the recovery of global enterprise spending, driving further growth in the x86 server market, while the deal will help Lenovo gain immediate scale and credibility in the market, creating an additional profit pool and fulfilling its “protect and attack” strategy.

Opportunities for cost savings in supply chain management, including procurement synergies from economies of scale, and sharing of best practices will be achieved through the deal, Lenovo said. The acquisition is also expected to enhance the company’s competitiveness by reducing operational costs.

IBM posted a loss of US$37.4 million before taxation for the year 2013, according to the filing.

– Contact HKEJ at [email protected]

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