China-based PC maker Lenovo claims its goal is to be the biggest computer maker following a deal to buy IBM's low-end server business.
The deal, which was originally announced in January, was recently approved by both U.S. and EU regulators. The $2.1 billion acquisition will close Oct. 1.
"After we stabilize the business, we will challenge the top two," said Lenovo CEO Yang Yuanqing, referring to Dell and Hewlett-Packard. The deal will make Lenovo the third-largest PC maker.
"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 No. 3 in the global server market," continued Yuanqing. "Now, our priorities are to ensure a smooth integration and deliver a seamless transition for customers."
In order to ensure the transition is seamless, IBM will continue to offer maintenance support for users on servers that Lenovo now owns, avoiding confusion for users during the transition.
While $2.1 billion is certainly a lot of money, it is around $200 million less than the deal was originally going to be. That amount was lowered due to lower-than-projected inventories on IBM's part. The $2.1 billion will be paid with $1.8 billion in cash and around $280 million in stock.
This is the second major purchase Lenovo has made so far this year, acquiring Motorola's smartphone business from Google back in January for $2.91 billion.
Despite fears of Chinese Internet spying and the possibility of theft of trade secrets, the deal was cleared by the Committee on Foreign Investment in the U.S. Servers owned by IBM are used extensively by the U.S. government.
It is expected the deal for IBM's x86 server business will generate $5 billion for Lenovo within the first year.
Despite the recent acquisitions, partners of Lenovo have said one of the company's biggest challenges would be to break into the U.S. data center market. Until now, the company's 25,000 solution providers in North America were made up of almost all PC-oriented partners. Lenovo has reportedly taken a number of measures to ensure that partners and customers know that things like maintenance contracts and sales representatives will remain the same despite the new acquisition.
