Lenovo in talks again with IBM for purchase of low-end server business

Nathan Andrada – Fourth Estate Cooperative Contributor

Hong Kong, China (4E) – Lenovo Group Ltd. is in talks with IBM Corp. to buy its low-end server business, and both companies may sign a deal within weeks, according to a source knowledgeable about of the matter.

The transaction could make Lenovo a major player that will rival Hewlett-Packard and Dell Inc. in servers business as the Chinese company has already surpassed its American competitors in the PC market.

In a statement to the Hong Kong Stock Exchange on Tuesday, Lenovo said it was in early-stage discussions about a potential acquisition, without specifying whether it involved buying a server business. The company said no deal has been reached so far.

IBM is seeking to sell its low profit margin businesses to focus more on software and services to revive its fortunes.

The source said that Lenovo is only interested to buy the x86 server hardware business and not services. If terms are agreed, a deal could be signed within a week, the person said.

Last year, both companies were in advanced discussions that involved the selling of IBM’s x86 server business, according to sources familiar with the talks at the time. Talks broke down because of disagreements over the price.

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