Lenovo and IBM announced on Sept. 29 that conditions have been satisfied regarding Lenovo's acquisition of the IBM x86-based server business. It is anticipated that the transaction will begin closing by Oct. 1.
The acquisition gives Lenovo the third biggest slice of the market for x86 servers, which is estimated to be worth $42.1 billion globally. In the deal, Lenovo will be getting the Flex System and BladeCenter blade switches and servers, System x, the integrated system Flex, blade maintenance and networking operations, and iDataPlex and NeXtScale associated software and servers.
IBM, on the other hand, will be retaining its mainframes System Z, Storage and Power Systems, PureData and PureApplication appliances, and Flex servers based on Power.
"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," said Yang Yuanqing, Lenovo chairman and chief operating officer.
IBM's x86-based server business will be joining Lenovo's fold under the Enterprise Business Group. As for Adalio Sanchez, who managed the business unit in IBM, he will continue to do the same in Lenovo as Enterprise Systems senior vice president. He will be under Gerry Smith, Lenovo Group executive vice president and Americas Group and Enterprise Business Group president.
The acquisition is estimated at $2.1 billion. About $1.8 billion will be fulfilled by Lenovo in cash payment while $280 million will be in stock, set at the closing price on Sept. 26. It satisfied regulatory conditions and requirements, including approval from the Chinese Ministry of Commerce, the Committee on Foreign Investment in the United States, and the European Commission.
Most of the major markets should begin closing the transaction starting Oct. 1, with other countries following suit later in the year. However, a few are expected to close beyond 2014, but no later than early 2015.
When Lenovo announced its plans to acquire IBM's server business, the two formed a strategic alliance that would make Lenovo IBM's original equipment manufacturer, while Lenovo resells certain products from IBM's software and storage portfolio, such as the General Parallel File System and Platform Computing solutions and the Storwize lineup.
With this, Lenovo should be able to offer more comprehensive IT solutions for enterprises, allowing the company to address a wider range of data center needs.
Lenovo is also set to acquire Motorola Mobility from Google, poising it to also become the third largest smartphone manufacturer in the world.
