What Does Lenovo Want From IBM?
Rumors are flaring up again that Chinese PC maker Lenovo (LNVGF.PK) is in talks with International Business Machines (NYSE:IBM) to purchase the latter’s low-end server division, according to a source who spoke to Reuters.
Last year, Lenovo and IBM failed to reach an agreement on the purchase due to price. IBM at that time had been hoping to get between $4 billion and $6 billion for the server unit, while Lenovo was only willing to offer $2.5 billion, Reuters reports. Now that IBM has given several disappointing quarterly results, the price for the unit has fallen to between $2.5 billion and $3 billion, according to analysts cited by the news service.
Last week, Lenovo confirmed to that it was in talks with someone regarding an acquisition of a server business but wouldn’t get any more specific.
Such a deal would be beneficial for both companies. IBM is looking to turn away from hardware to focus on cloud-based services and cognitive technology, and Lenovo wants to get in on the server market. Lenovo has been highly successful in the PC market, surpassing Hewlett-Packard (NYSE:HPQ) to become the world’s largest personal computer maker last year, but as that market shrinks, the company is looking to expand into mobile devices and data storage.