Lenovo close to terms with IBM on server unit: report

China-based giant could pay as little as $2bn

Tags: ChinaIBM (www.ibm.com)Lenovo GroupMergers and acquisitionsUSA
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Lenovo close to terms with IBM on server unit: report Lenovo has suspended trading in its shares pending an announcement. (Getty Images)
By  Stephen McBride Published  January 23, 2014

China-based Lenovo Group is close to agreeing terms with IBM for the acquisition of the US giant's low-end server business unit for $2bn to $2.5bn, Reuters reported.

Lenovo has suspended trading in its shares pending an announcement, which, according to one insider, could be made as soon as tomorrow.

Lenovo bought IBM's PC unit in for $1.75bn in 2005 and now leads the global PC market by shipment volume, stealing the crown from HP in the second quarter of 2013. But overall global PC sales are shrinking and vendors have been forced to look elsewhere to defend their bottom lines.

Two such vendors are Fujitsu and Dell, both of which have also been named in connection the purchase of IBM's server business. After going private last year, Dell is realigning its strategy to an enterprise services model, hoping to mimic IBM's success in that segment.

Lenovo is keen to position itself strongly in the data centre infrastructure space, and has already made strong gains in the tablet and smartphone markets.

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