Lenovo grabs IBM x86 server business in $2.3bn deal

Lenovo has inked a deal to buy IBM's x86 server business, taking Big Blue's Intel-based hardware division off its hands for $2.3bn. The two companies will also kick off a strategic relationship that will see Lenovo act as a reseller for certain IBM products, including enterprise storage systems and various software packages; IBM will still keep its fingers in the server pie, however, developing Windows and Linux software for x86 models.

It will also keep some of its enterprise hardware business. Post-transaction, Lenovo will be left with System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, and blade networking.

However, IBM will still keep its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.

Lenovo will take over maintenance operations for existing IBM customers, including customer services, though it will be contracted out to IBM for "an extended period of time" so as to maintain coverage as Lenovo's teams get up to speed.

The deal will also see some of IBM's staff jump ship; around 7,500 employees are expected to be offered employment with Lenovo.

Lenovo is no stranger to former IBM businesses. The Chinese company acquired the ThinkPad computing line of notebook and desktop PCs back in 2005, operating it for a period under the Lenovo brand, before transitioning to its own. Meanwhile, IBM will continue its investment into cloud computing and advanced processing, such as the new IBM Watson Group, the recipient of more than $1bn.

Around $2bn of the total purchase price will be paid in cash, with the remainder in Lenovo stock. The deal is still subject to regulatory approval.