China's Lenovo nears deal to buy IBM's server unit: sources
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[January 23, 2014]
(Reuters) — Lenovo Group Ltd is nearing an agreement to buy
International Business Machines Corp's low-end server business for
$2-2.5 billion, a deal that would help the Chinese company counter
the shrinking personal computers market, people familiar with the
The timing of the deal was uncertain, with one of the people saying
an announcement could come as early as Thursday. The final price
could be close the bottom end of the range, the person said.
Lenovo, the world's biggest PC maker, halted trading in its shares
pending an announcement in respect of a transaction.
The potential deal comes after IBM missed revenue expectations for
the fourth consecutive quarter when it reported earnings earlier
A deal for IBM's x86 servers, which power corporate data centers,
fits with Lenovo's attempts to remold itself as a force in mobile
devices and data storage servers. It also helps IBM's shift away
from hardware towards software and services.
Reuters had reported on Tuesday that Lenovo had resumed talks to buy
the IBM's lower-margin unit after failing to reach an agreement last
year following differences on pricing.
Lenovo's purchase of IBM's Thinkpad PC business in 2005 for $1.75
billion became the springboard for its leap to the top of global PC
Lenovo said earlier this week that it was in preliminary talks about
an acquisition. It declined to name the seller but said it was
making the statement in response to reports about its potential
acquisition of a server business.
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Recent reports have also indicated that Fujitsu Ltd and Dell Inc are
also potentially interested in buying the server unit.
IBM declined to comment, while Lenovo was not available for
The timing of the deal was first reported by the Wall Street
Journal, citing sources.
(Additional reporting by Denny Thomas
and Paul Carsten; reporting By Narottam Medhora and Nicola Leske;
editing by Ken Wills and Stephen Coates)
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