Nearly nine months after first announcing its purchase plans, Lenovo expects to close on its acquisition of IBM's x86 server business this Wednesday. The final $2.1 billion purchase price was reduced from the initial offered price of $2.3 billion due to IBM's lower-than-expected inventories.
Lenovo said the acquisition will make it the number three player in the global market for x86 servers, estimated at a value of $42.1 billion. HP currently occupies the top spot in that market, while IBM had previously occupied the number two position.
This is not the first time that China-based Lenovo has acquired a segment of IBM's business. It took over Big Blue's line of personal computers in 2005.
A 'Confident' Company
During a media conference call regarding the new acquisition this morning, we asked Lenovo chairman and CEO Yang Yuanqing to comment on the keys to successfully integrating IBM's x86 business into Lenovo.
"We have a lot of experience (with) integrating the culture," he said, referring to the 2005 acquisition of IBM's PC line. "We have both walked down that road before."
Based on its previous experience bringing an IBM business into its fold, Lenovo will know how best to integrate the leaderships, product lines and cultures of the two companies, Yang said. "We are very confident," he added.
Attacking Growth Plans
Under the deal, Lenovo will acquire IBM's System x, BladeCenter and Flex System blade server and switch lines, along with its x86-based Flex integrated systems, NeXtScale and iDataPlex servers and software, blade networking and maintenance operations. IBM will retain control of other lines, including its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, PureApplication and PureData appliances.
IBM will also continue to provide maintenance delivery on Lenovo's behalf during the transition to ensure a "seamless transition" for current customers. Meanwhile, Lenovo will serve as an original equipment manufacturer to IBM and will resell some of IBM's storage and software products to enterprise customers.
Lenovo is also on track to complete its acquisition of Motorola Mobility from Google. That deal is expected to make Lenovo the world's third-largest manufacturer of smartphones. Also announced in January, that $2.91 billion purchase is expected to expand Lenovo's reach in the North American, Latin American and western European markets.
During Monday's conference call, Gerry Smith, executive vice president of Lenovo Group and president of the company's enterprise business group and America's group, said, "There is a lot of work ahead of us in stabilizing the business and then attacking our growth plans."
Smith had noted earlier that "Lenovo has big plans for the enterprise market."