Lenovo to buy IBM's low-end server business for $2.9bn

A man walks past a Lenovo shop in Shanghai, on Jan 21, 2014. Chinese computer giant Lenovo will buy IBM's low-end server business for $2.3 billion (S$2,9 billion), it said on Thursday, giving it a platform to compete in that sector with United S
A man walks past a Lenovo shop in Shanghai, on Jan 21, 2014. Chinese computer giant Lenovo will buy IBM's low-end server business for $2.3 billion (S$2,9 billion), it said on Thursday, giving it a platform to compete in that sector with United States giants Dell and Hewlett-Packard. -- FILE PHOTO: REUTERS

HONG KONG, Jan 23, 2014 (AFP) - Chinese computer giant Lenovo will buy IBM's low-end server business for $2.3 billion (S$2,9 billion), it said on Thursday, giving it a platform to compete in that sector with United States giants Dell and Hewlett-Packard.

IBM will receive US$2.07 billion in cash and the rest in shares for the x86 business, Lenovo said, in a deal seen as helping the Chinese firm diversify away from the slumping PC-sales sector.

IBM will still provide maintenance on behalf of Lenovo, while some 7,500 members of staff worldwide will be offered employment by the Chinese company, according to Dow Jones Newswires.

The deal, announced in a statement to the Hong Kong Stock Exchange, comes after Lenovo bought the US firm's PC business for US$1.75 billion in 2005, in a landmark deal that showcased Chinese companies' efforts to go overseas.

It will also allow Lenovo to compete in the server segment with Dell and Hewlett-Packard as it looks to diversify away from the personal computer market, which has seen sales slump in recent years.

Thursday's announcement comes after Lenovo and IBM resumed talks on a buy-out of the US firm's low-end server business that had broken down last year over differences in price.