Posted on Monday, September 29 2014 @ 11:44 CEST by Thomas De Maesschalck
Lenovo announced it will close its acquisition of IBM's x86s server unit on October 1st for $2.1 billion. The acquisition price is $200 million lower than what the companies announced in January due to "a change in the valuation of inventory and deferred revenue liability". About $1.8 billion will be paid in cash and the remainder in stock.
In an interview, Lenovo Chief Executive Yang Yuanqing said the IBM deal opened a new "growth engine" for his company. He said he expected the x86 unit to bring in $5 billion in its first year and deliver margins higher than the 4 percent of Lenovo's PC business.
"In the large and medium enterprise space we can now fully leverage IBM technology to compete with brands like HP and Dell," Yang said by telephone. "We can combine this good technology with Lenovo's efficient operations."
IBM's x86 server business has trailed those of HP and Dell Inc [DI.UL] in market share. But Yang said Lenovo has expertise competing in markets with razor-thin margins, gained during its journey to becoming the world's largest PC maker.
Source: Reuters
