Lenovo reportedly interested in buying IBM’s server business

Posted by David Ranii on January 21, 2014 

No. 1 PC maker Lenovo confirmed that it is in preliminary acquisition talks with an unnamed third party after media outlets reported that the company is talking to IBM about purchasing its low-end server business.

Bloomberg News and Reuters, each citing an unnamed source, reported that the companies have resumed talks that reportedly failed to reach an agreement last year. Spokespeople for Lenovo and IBM declined to comment directly on the reports.

But Lenovo did issue a statement Tuesday saying it “is in preliminary negotiations with a third party in connection with a potential acquisition...As at the date of this announcement, no material terms concerning the potential acquisition have been agreed and the company has not entered into any definitive agreement in relation to the potential acquisition.”

Lenovo’s worldwide PC shipments have outpaced the industry for 18 consecutive quarters, and for the past two quarters it has been the undisputed market leader. But in the face of a struggling PC market, the company — which is based in China but has a headquarters in Morrisville that employs about 2,000 workers — has been expanding its focus to other devices, including servers. smartphones, smart TVs and tablets.

Meanwhile, IBM, which has a sprawling campus in Research Triangle Park, is focusing on software and services and looking to shed lower-profit hardware businesses in the face of slumping sales.

“This transaction would make sense for both companies,” Alberto Moel, an analyst as Sanford C. Bernstein & Co., told Bloomberg News.

Lenovo became a major player in the worldwide PC market, and a significant employer in the Triangle, when it acquired IBM’s PC business in 2005.

Lenovo’s American depositary receipts, which are akin to common stock, were trading 4 percent higher Tuesday morning.

News & Observer is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service