Lenovo Agrees to Acquire IBM’s x86 Server Business For $2.3 Billion

lenovo-ibm-x86-serversLenovo and IBM have entered into a definitive agreement in which Lenovo plans to acquire IBM’s ‘low-end’ 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, about two billion of which will be paid in cash and the balance in Lenovo stock. IBM will retain its ‘high-end’ business, with solutions including System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances. The transaction is subject to the satisfaction of  regulatory requirements, customary closing conditions and any other needed approvals.

Software for x86 servers

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.

Lenovo and IBM plan to enter into a strategic relationship which will include a global OEM and reseller agreement for sales of IBM’s 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 solutions.

Server maintenance by IBM

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 behalf for an extended period of time, so customers should see little change in their maintenance support.

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 announcement by IBM/Softlayer that it will invest $1.2 billion to expand its global cloud hosting services footprint to 40 data centers worldwide in 15 countries across five continents.

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