Lenovo to buy IBM’s server business in China’s biggest tech acquisition

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LenovoLenovo Group has agreed to buy IBM Corp’s server business for $2.3 billion as the Chinese PC giant grabs another piece of the computing world in a long-awaited deal.

The acquisition comes nearly a decade after Beijing-based Lenovo bought International Business Machines’s (IBM) loss-making ThinkPad business for $1.75 billion, eventually becoming the world leader in personal computers in 2012.

But with the PC business now under siege in the face of powerful smartphones and super-fast tablets, Lenovo is diversifying its revenue and remodelling itself as a force in mobile devices and data storage servers.

The acquisition of the IBM unit, still subject to approval from the Committee on Foreign Investment in the United States (CFIUS), would lift Lenovo’s market share in the server market to 14 per cent from 2 percent currently, said Peter Hortensius, senior vice-president at Lenovo and president of its Think Business Group.

Before that happens, Lenovo has to turn the server unit around. The low-margin business – which sells less powerful and slower x86 servers than IBM’s other higher-margin offerings – has posted seven quarters of losses as more clients switch to cloud storage from traditional infrastructure.