Lenovo: Yup, we're in talks with IBM to acquire low-end server business

Summary:Those IBM-Lenovo server talks are on again. Can these two agree on a price this time around?

Lenovo on Tuesday confirmed that it is in talks to buy its way into the enterprise server market most likely via IBM.

Various reports have indicated that IBM is looking to unload its low-end x86 business. Lenovo and IBM were in talks last year about a potential deal but couldn't agree on price. As noted previously, IBM is looking to move up market and the x86 server business could ultimately suffer the same fate as the PC market amid cloud computing.

Also see:  IBM's potential x86 server sale to Lenovo highlights oncoming train

In a statement to the Hong Kong Stock Exchange, Lenovo said:

The board of directors (the “Board”) of the Company noted certain articles published in the internet in relation to a possible acquisition by the Company of certain computer server business.

The Board would like to inform the shareholders of the Company (the “Shareholders”) and potential investors that the Company is in preliminary negotiations with a third party in connection with a potential acquisition (the “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.

For Lenovo, IBM's server business would give it an instant foothold in enterprise data centers. Lenovo is already a regular on the desktop. Lenovo also has the scale to make a low-end server business profitable. Dell was also rumored to be interested in IBM's low-end server business.

Topics: Servers, Hardware, IBM, Lenovo

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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