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.
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.