|[January 23, 2014]
Lenovo Plans to Acquire IBM's x86 Server Business
RESEARCH TRIANGLE PARK, N.C. & ARMONK, N.Y. --(Business Wire)--
Lenovo (HKSE: 992) (ADR: LNVGY) and IBM (News - Alert) (NYSE: IBM) have entered into a
definitive agreement in which Lenovo plans to acquire IBM's x86 server
business. This 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. The purchase price is approximately US$2.3
billion, approximately two billion of which will be paid in cash and the
balance in Lenovo (News - Alert) stock.
IBM will retain its System z mainframes, Power Systems, Storage Systems,
Power-based Flex servers, and PureApplication and PureData appliances.
The agreement builds upon a longstanding collaboration that began in
2005 when Lenovo acquired IBM's PC business, which included the ThinkPad
line of PCs. In the period since the companies have continued to
collaborate in many areas.
IBM will continue to develop and evolve its Windows and Linux software
portfolio for the x86 platform. IBM is a leading developer of software
products for x86 servers with thousands of products and tens of
thousands of software developer and services professionals who build
software for x86 systems.
Lenovo and IBM plan to enter into a strategic relationship which will
include a global OEM and reseller agreement for sales of IBM's
industry-leading entry and midrange Storwize disk storage systems, tape
storage systems, General Parallel File System software, SmartCloud Entry
offering, and elements of IBM's system software portfolio, including
Systems Director and Platform Computing (News - Alert) solutions.
Following the closing of the transaction, Lenovo will assume related
customer service and maintenance operations. IBM will continue to
provide maintenance delivery on Lenovo's behalffor an extended period
of time, so customers should see little change in their maintenance
Approximately 7,500 IBM employees around the world, including those
based at major locations such as Raleigh, Shanghai, Shenzhen and Taipei,
are expected to be offered employment by Lenovo.
This agreement follows recent announcements by IBM that it will invest
more than $1 billion in the new IBM Watson Group, and $1.2 billion to
expand its global cloud computing footprint to 40 data centers worldwide
in 15 countries across five continents.
"This acquisition demonstrates our willingness to invest in businesses
that can help fuel profitable growth and extend our PC Plus strategy,"
said Yang Yuanqing, chairman and CEO, Lenovo. "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."
"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," said Steve Mills, Senior
Vice President and Group Executive, IBM Software and Systems. "IBM has a
proven record of innovation and transformation, which has enabled us to
create solutions that are highly valued by our clients."
The transaction is subject to the satisfaction of regulatory
requirements, customary closing conditions and any other needed
approvals. Subsequent local closings will occur subject to similar
conditions, agreements and the information and consultation process in
While the transaction is being completed, both companies expect no
change in their independent, existing server operations, including
customer service and product availability.
Lenovo (HKSE: 992) (ADR: LNVGY) is a US$34 billion personal technology
company - the largest PC maker worldwide and an emerging PC Plus leader
- serving customers in more than 160 countries. Dedicated to
exceptionally engineered PCs and mobile internet devices, Lenovo's
business is built on product innovation, a highly-efficient global
supply chain and strong strategic execution. Formed by Lenovo Group's
acquisition of the former IBM Personal Computing Division, the Company
develops, manufactures and markets reliable, high-quality, secure and
easy-to-use technology products and services. Its product lines include
legendary Think-branded commercial PCs and Idea-branded consumer PCs, as
well as servers, workstations, and a family of mobile internet devices,
including tablets and smart phones. Lenovo, a global Fortune 500
company, has major research centers in Yamato, Japan; Beijing, Shanghai
and Shenzhen, China; and Raleigh, North Carolina. For more information
For more information about IBM, visit http://www.smartercomputingblog.com/
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