Lenovo renews grab for IBM server business: report

Chinese PC vendor reopens negotiations; faces competition from Dell

Tags: ChinaIBM (www.ibm.com)Lenovo GroupMergers and acquisitionsUSA
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Lenovo renews grab for IBM server business: report Lenovo and IBM held talks last year for the purchase the server business, but could not agree terms. (Getty Images)
By  Stephen McBride Published  January 21, 2014

China-based Lenovo Group has renewed talks with IBM over the purchase of the US tech firm's low-end server business, according to a Reuters report.

This would put PC-market leader Lenovo in competition with recently privatised Dell Inc, which is also reportedly biding for the unit.

Lenovo yesterday confirmed it was exploring the acquisition of a server business, but did not name the seller.

Both Lenovo and Dell operate in a shrinking PC market. As the number-three global player in tablets, Lenovo has the slate form factor to fall back on, but Dell does not.

Lenovo and IBM held talks last year for the purchase the server business, but could not agree terms. IBM reportedly valued the unit at between $4bn and $6bn, but Lenovo was only prepared to pay $2.5bn. However, a number of quarters of weak earnings may help to convince IBM to lower its expectations.

Lenovo bought IBM's PC business in 2005 and was able to instantly step into multiple markets, leading to the Chinese vendor's dominance of that market in the second quarter of 2013. Purchase of IBM's server business would position Lenovo strongly in the data centre infrastructure space.

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