Lenovo spends $5 million in A/NZ as IBM server acquisition wraps

Chinese vendor aims to achieve business as usual for existing IBM customers

Lenovo plans to close its acquisition of IBM’s x86 server business this Wednesday (1 October), the companies have revealed.

Lenovo has committed $5 million locally in the Australia and New Zealand market, according to Matt Codrington, managing director of Lenovo in the A/NZ market.

The A/NZ division is moving its head office to Chatswood in Sydney, opening a bigger office in Melbourne, and opening new offices in Canberra and Brisbane, he said.

The acquisition presents an opportunity for Lenovo to gain new customers in the Australian market, he told Computerworld Australia. “Just by the nature of the synergies within the two companies, we’re going to see an expanded portfolio into more customers via new partners.”

IBM brings data centre operator and cloud provider customers to Lenovo, said Tony Smith, who has left IBM to join Lenovo as director of its enterprise business group in A/NZ. “They’re a different type of client in some respect to where Lenovo has been traditionally.”

Business as usual will be an emphasis early on in the companies’ integration.

“Initially our strategy will be to keep the lights on so to speak, so we will make sure to maintain the current level of businesses, and then over the next couple of phases it’s an investment and acceleration in the channel leading to a broader enterprise play,” said Codrington.

Lenovo has signed a five-year agreement with IBM for support services, ensuring that support with IBM technical support remains the same, said Smith.

“We’re trying to keep it as business-as-usual as possible in terms of familiarity with business customers and partners in the way we service them.”

The USD$2.1 billion acquisition will make Lenovo the third-largest player in the $42.1 billion global x86 server market.

Lenovo is acquiring System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations.

IBM will retain its System z mainframes, power systems, storage systems, Power-based Flex servers, PureApplication and PureData appliances.

About USD$1.8 million of the purchase price will be paid in cash at closing, and about USD$280 million will be paid in Lenovo stock. The acquisition has received regulatory approval by the US Committee on Foreign Investment, the European Commission and the Chinese Ministry of Commerce.

The transition will begin Wednesday in Australia and other countries that are part of the initial closing, which includes most major markets. The transaction is expected to close in most other countries later this year, with a few remaining countries following in early 2015, Lenovo said.

Lenovo has announced a global goal of $5 billion in revenue and higher profitability than the PC business within the first year.

Adam Bender covers telco and enterprise tech issues for Computerworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Computerworld Australia on Twitter: @ComputerworldAU, or take part in the Computerworld conversation on LinkedIn: Computerworld Australia

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