Lenovo Group Limited (ADR) (OTCMKTS:LNVGY) and International Business Machines Corp. (NYSE:IBM) announced on September 29, 2014 with an official statement that IBM’s x86 server business will be acquired by Lenovo Group Limited (ADR) (OTCMKTS:LNVGY). Lenovo will pay approximately $2.1 billion for this acquisition which will make the company third largest player in x86 server market. $1.8 billion will be paid to International Business Machines Corp. (NYSE:IBM) in cash and remaining balance will be paid by Lenovo stock.
“System x racks and towers, X86 BladeCenter and x86 Flex system blade servers and integrated systems and associated software, switching and maintenance operations.”
Chairman and CEO of Lenovo Group Limited (ADR) (OTCMKTS:LNVGY), Yang Yuanqing said that,
“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,”
The management organization of the division will be kept and Adalio Sanchez, general manager of IBM x86 server business division will continue to work in Lenovo and report to Gerry Smith.
International Business Machines Corp. (NYSE:IBM) had difficulties to compete with Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL) and the company was losing market share to these companies. X86 server business unit is decreasing the overall gross margin of International Business Machines Corp. (NYSE:IBM) and Intel’s efforts to improve its platform leaving OEMs less space to add value and keep their profits.
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