Lenovo is close to finalizing a deal for IBM’s low-end server business, according to people briefed on the process.
A deal for the unit could be announced on Thursday, and would represent the successful completion of a deal that almost got done last year.
Early last year, Lenovo and IBM were in negotiations about the unit, but could not agree on the price. Lenovo valued the unit at about $2.5 billion, while IBM wanted at least $4 billion. People briefed on the deal did not know what Lenovo would ultimately pay for the unit, which includes IBM’s x86 server business, but said it was likely to be below $4 billion.
IBM restarted talks with interested parties recently. Dell and Fujitsu were among the other bidders considering buying the unit.
But because Lenovo had already taken a close look at the business last year, it was able to quickly make an offer that IBM was comfortable with.
The unit being sold has estimated revenues of about $5 billion a year, but IBM does not break out sales for the division, which has lower margins than its software and services businesses.
With a sale of the division, IBM would continue its transformation from primarily a hardware producer to a provider of services and software for businesses and governments. The company sold its ThinkPad personal computer business to Lenovo in 2005 for $1.75 billion, making it the third-largest personal computer producer in the world.
For Lenovo, based in China, acquiring the server business could help it weather the slow decline in its core personal computer business. Lenovo is also expanding into tablets and smartphones as it tries to manage the slow decline of the personal computer market.
The Wall Street Journal earlier reported that a deal could be announced on Thursday.
