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Lenovo in talks to buy IBM’s server unit

Shanghai Daily, January 22, 2014

• Lenovo Group Ltd is in talks to acquire International Business Machines Corp's low-end server business as the world's No. 1 personal computer maker diversifies into other markets amid a sales decline in the PC industry.

  Lenovo is negotiating to acquire IBM's x86 server hardware business and a deal could be signed within a week if terms are agreed, Bloomberg News said yesterday, citing an unnamed person. The source didn't have details about the current price or structure of the proposed deal.

  The deal is expected to improve Lenovo's technological level and profit margin.

  The expected deal also marks IBM's exit from the hardware business to focus on the service and software sectors.

  Both sides failed to agree last year on a price for the assets, estimated to be worth US$2.5 billion to US$4.5 billion.

  The two companies declined to comment on the issue yesterday. But Lenovo said it would reveal "news about acquisition" within weeks.

  Yang Yuanqing, Lenovo's chief executive officer, is always scouting opportunities to expand beyond the core PC business, or PC Plus strategy as he called it. This strategy has pushed Lenovo's expansion into smartphones and TV as well as storage equipment and servers running corporate networks as it battles declining PC sales globally.

  Global PC sales totaled 82.6 million units in the fourth quarter, a 6.9 percent drop from a year earlier.

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