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Lenovo to close its acquisition deal on IBM’s server division on Oct. 1

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September 29, 2014

Lenovo said earlier today that it will close its acquisition deal on IBM’s x86 server division on October 1st after a few hundred million dollars was dropped from the initial asking price.

The Chinese technology company will complete the transaction with a closing purchase price of $2.1 billion, which is a little lower than the original $2.3 billion price tag because of a change in the valuation of IBM’s server inventory and deferred revenue liability, Lenovo said.

Lenovo will hand over around $1.8 billion in cash and the rest in stock for a slice of an old faithful in the technology world that it will be hoping can open some doors to international customers.

“With the closing of this x86 server acquisition, Lenovo will add a world-class business that extends our capabilities in enterprise hardware and services, immediately making us a strong number three contender in the global server market,” said Yang Yuanqing, chairman and CEO of Lenovo.

“Today, our priorities are to ensure a smooth integration and deliver a seamless transition for enterprise customers. By combining Lenovo’s global reach, efficiency and operational excellence with IBM’s legendary quality, innovation and service, I am confident that we will have competitive advantages to help us drive profitable growth and build Lenovo into a global enterprise leader.”

Lenovo is pretty good when it comes to spending its way into markets. The company already acquired IBM’s PC business back in 2005 and is in the midst of acquiring Motorola Mobility’s smartphone business from Google, a decision that will make it the world’s third largest smartphone maker as well.

There was some concern at one point that Lenovo’s offer for IBM servers wouldn’t pass muster, given the current U.S. attitude towards Chinese technology firms.

The United States and China have been at loggerheads over multiple cybersecurity issues, accusing each other of corporate espionage and general spying and their suspicions have led to deals between companies from the two countries getting delayed or even scrapped altogether.

The U.S. Treasury Department’s Committee on Foreign Investment in the United States, which looks at the national security implications of specific business deals, was looking into the Lenovo acquisition and several reports suggested that it was worried about giving China a boost in high-performance computing and it was concerned that Lenovo could give China access to IBM servers.

But the committee okayed the deal in August. As part of the x386 server division deal, Lenovo will also partner up with IBM on storage and software as well, becoming a reseller of IBM products including Storwize, LTO, Smart Cloud and Platform Computing.

Source: Lenovo.

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