Lenovo to buy IBM X86 server hardware and related maintenance services for 2.3 billion dollars

January 23, 2014, Lenovo issued a notice in HKEx that will be 2.3 billion U.S. dollars to acquire IBM X86 server hardware and related maintenance services. The purchase price includes 2.07 billion dollars in cash and 182 million shares of Lenovo Group directed to IBM. After the merger, Lenovo will become the world's third largest X86 server manufacturer.

The assets involved in the transaction include

1, a number of hardware products, including system X, BladeCenter, Blade, Flex system, Pure Flex products, blade receptacle Marvell Network products and other related tangible products;

2. Some intellectual property rights related to the business;

3, business related, including System X, BladeCenter, Blade, Flex system and pure flex and other products.

It is reported that the acquisition needs to obtain the U.S. Foreign Investment Commission, the European Commission and the Ministry of Commerce and other relevant approval before the formal completion.

What are the difficulties of acquisition? Can Lenovo be trusted by the United States

For Lenovo, this would be an unprecedented and difficult negotiation, much as hard as the acquisition of IBM's PC business, for the simple reason that, for the US, the server involves a lot less security than the PC business.

There are a few names on the list of IBM server business, Dell, Fujitsu, Lenovo. For the three companies, there are "no security concerns" about the sale to Dell, and Dell does have an intention to transform IT services, and selling to Lenovo may be much simpler in terms of business integration.

Let's review the history of Lenovo's acquisition of IBM's PC business. Due to security concerns, Lenovo's cooperation with IBM has been disturbed many times, in order to make the cooperation progress, IBM even made three concessions: first, the ban on foreigners, that is, Lenovo personnel, into IBM in the United States, North Carolina, "Research Triangle Park" two buildings; IBM does not provide IBM's list of U.S. government agency clients to Lenovo Group, and third, relocate thousands of staff from North Carolina to other locations.

And through the memories of Lenovo executives we also know that the last few minutes of the signing of the two sides had a thrilling scene. The plot was as follows: December 8, 2004 Nine O'Clock in the morning, IBM Senior vice President Johnr.joyce and IBM Greater China President Zhou Weikun and other people arrived at the Beijing Asian Games Village, Wuzhou Crowne Plaza Hotel. In the parking lot, the above people received a call from the United States: everyone should not get off. According to the original plan, they are to share with Lenovo to announce the purchase of PC business matters. Fortunately, the last near misses.

The server involved in this acquisition is a more sensitive business unit than a PC. Lenovo IBM negotiations focused on a number of aspects: the scope of mergers and acquisitions, the fate of the people, customers, channels, brands and so on.

If we want to further understand the difficulty of this merger, let us look at Chinese enterprises overseas mergers and acquisitions or expansion of the big background:

Huawei's bid to buy 3Leaf was vetoed by the US Foreign investment Committee in February 2011, and in August 2012, the US International Trade Commission (ITC) announced a massive "337 survey" of multinational wireless electronics manufacturers, and Huawei ZTE was on the list; even into 2013, Such cases of distrust against Chinese companies have also occurred.

What is the meaning of the acquisition? Change time and market with capital

All along, in the server market, Chinese enterprises are the absolute supporting role. In the global X86 server market, IBM Dell HP has a near-monopoly advantage over the market. From 2013, China's power began to rise, and its representative business is the dawn of the wave.

Lenovo is just a winner of the Chinese market. IDC released the first quarter of 2013 China Regional Server market Research report, Lenovo Server to 12.3% of the market share continues to lead the domestic X86 server market. This is the 9th consecutive quarter since the first quarter of 2011, Lenovo occupied domestic server market share of the top.

This is a good score, but the result has a fatal drawback: Lenovo's market is delineated in mainland China, and Lenovo's president, Chen Xudong, aims to make the server project the top three in the world.

This is the origin of Lenovo's acquisition of server products. According to the normal pace of development, Lenovo to enter the world's first three is too difficult. Even before that, Lenovo did a lot of work, like working with EMC to do the server market.

The significance of mergers and acquisitions for Lenovo is that Lenovo can acquire brands and markets in the west, a market-changing game that greatly shortens the time it takes for Lenovo servers to expand globally.

What will Lenovo do after the merger succeeds?

After the acquisition of IBM server, Lenovo's role should be two kinds, one is it butler, the other is the hardware provider.

The IT Butler is an integrated solution provider that involves more than just stand-alone products, software, networks, and servers. Lenovo serves as the General Service provider, providing End-to-end solutions.

Such things are familiar to Lenovo. In fact, Lenovo played a similar role in the Beijing Olympics. Of course, Lenovo can also focus on its solutions with the products of other vendors, such as Cisco.

The other is to act as a hardware provider. With other companies playing the role of it stewards, Lenovo is involved in providing IBM's servers.

Of course, whatever the role is, it will be much simpler for Lenovo's future path. The reason is that IBM for many Chinese companies, means quality, the company's products are many companies listed on the preferred list.