Chinese PC maker Lenovo Group Ltd has agreed to buy International Business Machine (IBM) Corp’s low-end server business for $2.3 billion in what would be China’s biggest technology deal. The long-expected acquisition comes nearly a decade after Lenovo bought IBM’s money-losing ThinkPad business for $1.75 billion, ev
Chinese PC maker Lenovo Group Ltd has agreed to buy International Business Machine (IBM) Corp's low-end server business for $2.3 billion in what would be China's biggest technology deal.
The long-expected acquisition comes nearly a decade after Lenovo bought IBM's money-losing ThinkPad business for $1.75 billion, eventually becoming the world leader in personal computers in 2012.
The sale of the low-end server operation – which still needs US government approval – would allow IBM to focus on its decade-long shift to more profitable software and services.
The deal would increase Lenovo's share in the server market to 14%from 2%, said Peter Hortensius, Senior VP at Lenovo.
The deal needs clearance from the Committee on Foreign Investment in the United States (CFIUS), which protects US national security.
Lenovo's purchase of IBM's notebook division faced scrutiny before approval, and this time will be easier, analysts said.
With Lenovo's PC business under siege from powerful smartphones and super-fast tablets, the company is remodeling itself as a force in mobile devices and data storage servers.
The server business being sold by IBM, which produced low-cost x86 servers, competes with Hewlett-Packard Co and Dell but lags both in market share.
IBM's server business is the world's second-largest, with a 22.9% share of the $12.3 billion market Q3 2013, according to technology research firm Gartner.
Hewlett-Packard is the biggest player, while Lenovo does not appear in the top 5.