IBM has restarted efforts to sell its low-end server business and is in talks with companies including Dell and Lenovo, two people briefed on the process said Monday.
IBM was close to a deal to sell the unit to Lenovo last year, but talks between the companies broke down over price expectations, and the sale process was shelved. Lenovo was hoping to pay about $2.5 billion, while I.B.M. was hoping for at least $4 billion, these people said.
Talks have recently restarted, and Dell has expressed serious interest in the deal. Other bidders are also thought to be interested in the unit. But Lenovo, having taken a close look at the business last year, was thought to be leading, the people briefed on the matter said.
Talks between the companies could still fall apart, resulting in another failed sale process. It was not clear what price was being discussed this time around.
The unit includes IBM’s X86 server business and is estimated to have sales of about $5 billion a year. The company does not break out precise revenue for the division, which has lower margins than its software and services businesses.
A sale would be the latest step in IBM’s evolution from a dominant producer of hardware like computers and servers into a company focused on providing services to governments and businesses. IBM has already shed its personal computer and printer units, though it still makes high-end servers.
For Dell, which was recently taken private by management and Silver Lake Partners, securing the low-end servers unit would be the first big move toward its promised transformation out of the public eye. Dell is aiming to reduce its reliance on personal computers and expand into services and software. Buying the server unit could help Dell generate additional cash as it continues that transition.
For China’s Lenovo, the world’s largest maker of personal computers, buying the server business could help it stem the decline of its core market, which is slowly eroding. Lenovo acquired IBM’s ThinkPad PC business in 2005 for $1.75 billion, establishing itself as the third-largest personal computer maker at the time. In recent years, Lenovo has begun making smartphones and tablets as well.
The Wall Street Journal reported Dell’s interest in the unit earlier.
