Lenovo to buy IBM's low-end server business for $2.3 billion

Jan. 23, 2014 at 5:15 PM
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BEIJING, Jan. 23 (UPI) -- Multinational computer and electronics firm Lenovo said it would buy the low-end server business from U.S. technology giant IBM for $2.3 billion.

The deal caps the second round of negotiations between the two companies. A year ago, talks to purchase the business from IBM failed due to a disagreement on price, the New York Times reported Thursday.

Lenovo, which has headquarters in Beijing and Morrisville, N.C., said the deal involved $2 billion in cash and the remainder in shares.

Lenovo also said it would offer about 7,500 IBM employees jobs in Asia and the United States.

"With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long term, just as we have done with our PC business," said Lenovo's Chairman and Chief Executive Officer Yang Yuanquing in a statement.

A year ago, IBM was seeking $4 billion for the low-end server business, which is a low-margin business that is running into challenges due to advancing cloud technology and the point that critical customers, such as Google, are now making their own servers.

IBM's low-end server division earned an estimated $5 billion in revenue in 2013, but that number cannot be confirmed, as IBM does not break out figures on its low-end server unit.

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