NEW YORK (TheStreet) The second time can also be a charm: Chinese personal computer maker Lenovo on Thursday, Jan. 23, agreed to buy the low-power server business of IBM (IBM) for $2.3 billion, two days after confirming it had entered talks.
Lenovo, of Beijing, said it would pay about $2 billion in cash and the remainder in shares for IBM's x86 server business as it continues to expand its hardware activities to remain the world's biggest computer maker.
"With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long-term," said Lenovo chairman and CEO Yang Yuanqing in a statement.
Lenovo has used acquisitions to surpass rivals such as Dell and Hewlett-Packard (HPQ) in the personal computer space. The surge began with the $1.8 billion purchase of IBM's personal computer division in 2005. In 2011 it expanded with the $660 million purchase of German computer maker Medion.
The Chinese buyer said it expected to take on 7,500 current IBM employees in Raleigh, N.C., Shanghai, Shenzhen and Taipei. The successful offer follows talks last year that ended when the companies couldn't agree on a price.
The auction reportedly also caught the interest of Tokyo-based Fujitsu and Round Rock, Texas-based Dell.
IBM is moving away from its traditional hardware business to focus on experimental technologies and cloud-based products, which allow users to store files and data at remote locations. The files and data can then be accessed from nearly any device anywhere in the world.