Blog Post

IBM-Lenovo server deal nearly done

IBM’s sale of its server business to Lenovo will be officially done October, 1, IBM said on Monday.

Under the terms of the deal, announced in January, Beijing-based [company]Lenovo[/company] gets IBM’s System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. IBM will keep its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, PureApplication and PureData appliances.

[company]IBM[/company] is getting about $2.1 billion, $1.8 billion of which will be cash paid at closing; and about $280 million in Lenovo stock. Lenovo said the total is a tad less than the $2.3 billion stated in January because of changes in the value of inventory and deferred revenue liability, according to a Reuters report.

This divestiture is part of IBM’s move, under CEO Ginni Rometty, to sell off lower margin businesses to better focus on cloud, software and services. The company is reportedly also trying to sell off its chip-manufacturing business, although it likely will keep designing high-end chips.

IBM said with the addition of its server business, Lenovo will be the third-largest player in a market that [company]IDC[/company] estimates is worth $42.1 billion.