Lenovo restarts talks to buy IBM’s low-end server unit

Lenovo Group has restarted talks to buy IBM's low-end server unit, as the world's largest PC maker tries to expand its portfolio amid a shrinking PC market.

Responding to reports about its potential acquisition of a server business, Lenovo today  said that it was in preliminary talks about an acquisition, but did not name the seller.

The resumption of talks comes nearly a year after both companies differed on valuation for IBM's x86 server hardware business. (See: Lenovo in talks to buy IBM's x86 business)

Several media had then reported that IBM was seeking between $4 billion to $6 billion, while Lenovo was offering only $2 to $2.5 billion.

Lenovo became a dominant force in the PC market after it acquired IBM's PC unit in 2005 for $1.25 billion.

IBM's server business has been underperforming, but still managed to generate $9.2 billion in the fourth quarter last year, according to figures from market intelligence firm IDC.

IBM is keen on selling this business to Lenovo since it does not view the Chinese company as a threat to other parts of its business, like networking or converged infrastructure, data centre, which Lenovo is not into.