As Expected, Lenovo Acquired IBM’s Entire Storage Business, for $3.4 Billion

Lenovo Group Ltd. and IBM Corp. have entered into a definitive agreement in which Lenovo plans to acquire all the storage business of IBM but tape drives and libraries, and some fundamental R&D.

This includes IBM Storwize family, IBM XIV, IBM SONAS, IBM System Storage DS8000, IBM Spectrum Storage, FlashSystem, and associated software.

The purchase price is approximately $3.4 billion, approximately three billion of which will be paid in cash and the balance in Lenovo stock.
 
The agreement builds upon a longstanding collaboration that began  when Lenovo acquired IBMs PC business in 2005 and then server businesss in 2014.

In the period since the companies have continued to collaborate in many areas.
 
Following the closing of the transaction, Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time, so customers should see little change in their maintenance support.
 
Approximately 6,500 IBM employees around the world, including those based in San Jose, CA, are expected to be offered employment by Lenovo.
 
“This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our storage strategy,” said Yang Yuanqing, chairman and CEO, Lenovo. “With the right strategy, great execution, continued innovation and a clear commitment to the storage industry, we are confident that we can grow this business successfully for the long-term, just as we have done with our worldwide PC and server business.”
 
“This divestiture allows IBM to focus innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data, Cloud and IoT,” said Steve Mills, SVP and group executive, IBM Software and Systems. “IBM has a proven record of innovation and transformation, which has enabled us to create solutions that are highly valued by our clients.”
 
The transaction is subject to the satisfaction of  regulatory requirements, customary closing conditions and any other needed approvals. Subsequent local closings will occur subject to similar conditions, agreements and the information and consultation process in applicable countries.
 
While the transaction is being completed, both companies expect no change in their independent, existing storage operations, including customer service and product availability.