Lenovo (HKSE: 992) (ADR: LNVGY) and IBM (NYSE: IBM) recently announced the integration of IBM’s x86 server business globally, including Malaysia, adding the x86 sales and maintenance teams to its current commercial, consumer and smartphone businesses here. The agreement builds upon a strong history of collaboration that began in 2005 when Lenovo acquired IBM’s PC business, including the ThinkPad line of PCs.
Lenovo acquired the 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.
“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 number three in the global server market,” said Khoo Hung Chuan, Country General Manager, Lenovo Malaysia. “Our priorities are to ensure a smooth integration and deliver a seamless transition for customers. Lenovo has big plans for the enterprise market. Over time, we will compete vigorously across every sector, using our manufacturing scale and operational excellence to repeat the success we have had with PCs.”
The agreement builds upon a strong history of collaboration that began in 2005 when Lenovo acquired IBM’s PC business, including the ThinkPad line of PCs. Lenovo’s pending acquisition of Motorola Mobility from Google will make it the world’s third-largest smartphone maker, while further strengthening its position as a top-three maker of smart connected devices – PCs, tablets and smartphones.
Lenovo and IBM have also established a strategic alliance where Lenovo will serve as an Original Equipment Manufacturer (OEM) to IBM and resell selected products from IBM’s industry-leading storage and software portfolio, including IBM’s entry and midrange Storwize storage product family, Linear Tape Open (LTO) products, IBM Flash storage arrays and elements of IBM’s system software portfolio, including Smart Cloud, General Parallel File System and Platform Computing solutions. This strategic alliance means Lenovo can now offer these products as part of a more comprehensive enterprise IT solution, allowing it to support a greater range of customer needs in data centers.
Lenovo is buying IBM’s x86 server business as a whole and is committed to following the IBM x86 product roadmap, including Flex and x86-based PureFlex integrated systems. Lenovo will continue to drive innovation in these products. As previously disclosed, upon close, IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time, so customers will experience a seamless transition with no change in their maintenance support.
The purchase price is approximately US$ 2.1 billion. Approximately US$ 1.8 billion will be paid in cash at closing after estimated adjustments and approximately US$ 280 million will be paid in Lenovo stock, based on the closing price of Lenovo’s stock on September 26, 2014. The transaction satisfied regulatory requirements and conditions, including clearance by the Committee on Foreign Investment in the United States (CFIUS), the European Commission and the Chinese Ministry of Commerce.
The transition began on the 1st of October in countries that are part of the initial closing, which includes most major markets. The transaction is expected to close in most other countries later this year, with the few remaining countries following in early 2015.