Lenovo bids for IBM’s server business

Chinese hardware maker Lenovo, which famously bought most of IBM’s hardware business, is now after the server arm, which it did not get in the first sweep.

This is the second time the two outfits have tried to reach a deal.  Last year negotiations floundered on the price. IBM wants between $4 billion to $6 billion for the unit, while Lenovo wanted to write a cheque for $2.5 billion.

It has been estimated that IBM’s low-end server business could be worth between $2.5 billion to $2.9 billion. The division has not been doing well over recent quarters, and IBM was probably more likely to do a deal than last year.

Lenovo has confirmed that it is in preliminary talks about “an acquisition” and was coy about the name but said it was making the statement in response to reports about its potential acquisition of a server business.

The ever-shrinking Biggish Blue would not comment at all.

There had been talk at that Dell was also in the frame to buy the server business and it is not clear how much it wants to pay.

The potential buyer would get IBM’s x86 servers which power corporate data centres. Lenovo is attempting to re-invent itself as a growing force in mobile devices and data storage servers.

IBM is finally shifting away from hardware towards software and services.

Lenovo’s purchase of IBM’s Thinkpad PC business in 2005 for $1.75 billion became the springboard for its leap to the top of global PC maker rankings.