Lenovo set to close IBM x86 Server Business acquisition

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 US$42.1 billion global x86 server market.

Terms of the deal will see Lenovo acquire 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, while 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,” says Yang Yuanqing, chairman and CEO, 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.”

The agreement builds upon a strong history of collaboration that began in 2005 when Lenovo acquired IBM’s PC business, including the ThinkPad line of PCs.

Lenovo’s pending acquisition of Motorola Mobility from Google will make it the world’s third-largest smartphone maker, while further strengthening its position as a top-three maker of smart connected devices – PCs, tablets and smartphones.

“The acquisition is a clear demonstration of the confidence we have earned based on our consistent track record as a responsible global investor and as a secure and reliable technology provider,” adds Gerry Smith, executive vice president, Lenovo Group.

“Lenovo has big plans for the enterprise market. Over time, we will compete vigorously across every sector, using our manufacturing scale and operational excellence to repeat the success we have had with PCs.”

Lenovo is buying IBM's x86 server business intact and is says it is "committed to following the IBM x86 product roadmap", including Flex and x86-based PureFlex integrated systems.

Lenovo insists it will continue to "drive innovation in these products" and as previously disclosed, upon close, IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time.

The global team of the IBM x86 server business will be organised under Lenovo’s Enterprise Business Group - Adalio Sanchez led the x86 server business at IBM and will continue in this capacity at Lenovo, as senior vice president of Enterprise Systems, reporting to Gerry Smith.

The purchase price is approximately US$ 2.1 billion with approximately US$ 1.8 billion to 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 transition will begin Wednesday in countries that are part of the initial closing, which includes most major markets. The transaction is expected to close in most other countries later this year, with the few remaining countries following in early 2015.