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IBM and Lenovo Group have entered into a definitive agreement in which Lenovo plans to acquire IBM’s x86 server business. The agreement builds upon a longstanding collaboration that began in 2005 when Lenovo acquired IBM’s PC business, which included the ThinkPad line of PCs. In the period since the companies have continued to collaborate in many areas.

The agreement includes 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 retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.

The purchase price is approximately $2.3 billion, approximately two billion of which will be paid in cash and the balance in Lenovo stock.

Following the closing of the transaction, Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time, so customers should see little change in their maintenance support. Approximately 7,500 IBM employees around the world, including those based at major locations such as Raleigh, Shanghai, Shenzhen and Taipei, are expected to be offered employment by Lenovo.

Lenovo and IBM plan to enter into a strategic relationship which will include a global OEM and reseller agreement for sales of IBM’s industry-leading entry and midrange Storwize disk storage systems, tape storage systems, General Parallel File System software, SmartCloud Entry offering, and elements of IBM’s system software portfolio, including Systems Director and Platform Computing solutions.

IBM will continue to develop and evolve its Windows and Linux software portfolio for the x86 platform.  IBM is a leading developer of software products for x86 servers with thousands of products and tens of thousands of software developer and services professionals who build software for x86 systems.

“This divestiture allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data and cloud. IBM has a proven record of innovation and transformation, which has enabled us to create solutions that are highly valued by our clients,” said Steve Mills, senior vice president and group executive of IBM software and systems.

The transaction is subject to the satisfaction of regulatory requirements, customary closing conditions and any other needed approvals.

Tags: Lenovo, IBM, x86

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