IBM's x86 server division could potentially be acquired by Lenovo, as per recent reports
Lenovo, the second-largest PC maker globally, has confirmed preliminary talks with a third party about a potential acquisition. However, it's important to clarify that Lenovo is not currently considering acquiring IBM’s x86 server division for up to $4.5 billion.
This clarification is necessary because Lenovo already acquired IBM’s x86-based server business back in 2014 for approximately $2.1 billion. The deal included the System x and BladeCenter product lines, as well as the integration of about 6,500 IBM employees into Lenovo. The acquisition allowed Lenovo to gain enterprise customers, improve profit margins, and develop a closer relationship with Intel as the main server processor supplier.
The current Lenovo server product lines, such as the ThinkSystem SR250 V3 and SR650 V3, reflect ongoing developments in their server hardware post-acquisition but do not indicate a new buyout attempt.
Recent reports suggest that Lenovo is the only company in the running to buy IBM's x86 server business, according to an anonymous high-ranking executive tracking the deal. These reports were cited by Bloomberg from an anonymous source familiar with the matter. However, no official confirmation has been made by either party.
It's worth noting that Lenovo has a history with IBM. In 2004, Lenovo acquired IBM's PC business, and since 2008, Lenovo has been making and selling IBM's entry-level rack and tower x86 servers under a licensing deal.
IBM's Systems and Technology unit, which sells servers, storage, and mainframes, experienced a 17% year-on-year revenue decline in its most recent quarter. IBM's CFO Mark Loughridge declined to comment on the speculation of selling the x86 server business, but he mentioned that parts of IBM's business, such as the Power x and storage product lines, have underperformed and will undergo substantial actions.
Lenovo's UK and Ireland vice-president Marc Godin stated that the company plans to invest in several areas of the enterprise, including servers, over the next 12 months. Godin also mentioned that Lenovo is selectively growing bigger into the server space, country by country.
Reports suggest that the potential deal is estimated to be worth up to $4.5 billion and could be just weeks away. However, it's essential to emphasise that Lenovo's acquisition of IBM’s x86 server division is historical (2014) and not a current proposal at $4.5 billion.
As always, more information will be shared as it becomes available.
Lenovo's current server product lines, like the ThinkSystem SR250 V3 and SR650 V3, reflect ongoing advancements in their server hardware post-acquisition in 2014, but this does not indicate a new buyout attempt of IBM's x86 server business. Lenovo, not surprisingly, has a history with IBM, having also acquired IBM's PC business in 2004 and since then making and selling IBM's entry-level rack and tower x86 servers under a licensing deal.
