Lenovo to close purchase of IBM’s x86 server business on Oct. 1

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Lenovo will finally close a deal that will make it one of the largest players in the x86 server market, boosting its ability to win business customers.

The Chinese company announced on Monday that it will officially begin closing the acquisition of IBM’s x86 server business on Wednesday, October 1. IBM’s x86 server lineup includes those powered by Intel and AMD microprocessors. Specifically, 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.

The $2.1 billion deal will put Lenovo in third place in the worldwide x86 server market behind HP and Dell. Speaking with Reuters, Lenovo CEO Yang Yuanqing said the deal opened a new “growth engine” for his company and that he expected the x86 server business to generate sales of $5 billion in its first year.

“With the close of the x86 acquisition, Lenovo will add a world-class business that extends our capabilities in enterprise hardware and services, immediately making us a strong number three in the global server market,” Yang Yuanqing said in a statement. “Now, our priorities are to ensure a smooth integration and deliver a seamless transition for customers.”

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To help ensure that seamless transition, IBM will continue to provide maintenance support on the servers for a certain extended period time so that customers won’t be inconvenienced by the changeover. The global team of the IBM x86 server business will be organized under Lenovo’s Enterprise Business Group.

The deal also continues Lenovo’s continued push into areas beyond consumer PCs. In 2005, the company bought IBM’s ThinkPad PC business. In January of this year, Lenovo announced a deal to buy Motorola and its smartphone business for $2.91 billion. Collectively, these moves mean that Lenovo will have a strong grip in three markets — PCs, servers and smartphones.

Lenovo will pay IBM around $1.8 billion in cash and around $280 million in stock. The transition of the x86 server business will start Wednesday in most major markets, Lenovo said. The deal is expected to close in other countries later this year, with the remaining to follow in early 2015.