Lenovo aims to dominate global PC markets after IBM deal
U.S., EU approve deal for $2.1B US purchase of low-end server business from IBM
China’s Lenovo Group aims to be the world’s biggest maker of personal computers after its deal to buy IBM’s low-end server business was approved by U.S. and EU regulators.
The $2.1 billion US deal, announced in January, but to close on Oct. 1, puts Lenovo in third place in PCs, behind Dell and Hewlett-Packard.
“After we stabilize the business, we will challenge the top two,” CEO Yang Yuanqing said in an interview with Bloomberg.
Within the first year of acquiring the server unit, Lenovo plans to build it into a $5 billion enterprise business and build on its 14 per cent market share. It is also acquiring a larger piece of the hardware market, which IBM has jettisoned as unprofitable.
Lenovo has a deal with NEC Corp. of Japan to dominate that market.
The cost of the IBM deal was about $200 million lower than the $2.3 billion initially announced, because of lower-than-projected inventories in the IBM unit.
Fears of China's online spying
The deal was cleared by the Committee on Foreign Investment in the U.S. despite fears over Chinese internet spying and the theft of trade secrets.
IBM servers are broadly utilized by the US government and in critical infrastructure operations.
But with computers from its competitors already made in China, Lenovo won approval for the IBM deal from Homeland Security.
Lenovo also bought Motorola Mobility for $2.9 billion US in a deal that will give it access to 2,000 patents and licences to Google smartphone intellectual property.
That deal has already had EU approval and Lenovo expects approval from the U.S. by the end of the year. That will make it No. 4 in the handset market with a brand that is well-known in the West.