Lenovo, IBM to Close $2.1 Billion Server Deal Oct. 1
Lenovo will become the world's number-three server maker, with designs to pass HP and Dell.Lenovo on Oct. 1 will become the world's third-largest server vendor, and will begin efforts to overtake Hewlett-Packard and Dell for the top spot, according to officials. Lenovo and IBM executives on Sept. 29 announced that, in two days, they will close the $2.1 billion deal in which Lenovo will buy IBM's x86 server business. The acquisition that was announced in January is part of Lenovo's larger push to become a dominant player in all segments of computing, an effort that includes the vendor's current bid to buy Motorola Mobility from Google for $2.9 billion. With IBM's server business in the fold, Lenovo executives said the company will look to rapidly grow its Enterprise Business Group over the next year into a profitable unit with more than $5 billion in revenue, Lenovo Chairman and CEO Yang Yuanqing said during a conference call with analysts and journalists Sept. 29. Yang and other executives also said that with the deal closing, they can aggressively push back at rivals like HP, which used the 10 months it took for the deal to clear regulatory obstacles to ramp up efforts to lure Lenovo and IBM server customers. HP launched a program called Project Smart Choice aimed at IBM customers that may have had reservations about making the move to Lenovo.
Gerry Smith, executive vice president of Lenovo Group and president of Lenovo's Enterprise Business Group and Americas Group, said during the conference call that the company expects to see results similar to those from Lenovo's $1.25 billion acquisition in 2005 of IBM's PC business, which helped propel Lenovo into the world's largest PC vendor.