Lenovo on track for growth as US regulators approve IBM deal
US consent for server unit purchase seen boosting Lenovo shares further
Computer kingpin Lenovo is well on its way to building a new US$5-billion-a-year business, after United States regulators gave the go-ahead to its acquisition of IBM's low-end server division.
That US$2.3 billion deal will transform Lenovo into a major player in the global market for so-called x86 servers, the low-cost, general-purpose corporate computers used to run business applications and which serve as the basic hardware inside large storage systems, as well as in data centres.
Ricky Lai, a research analyst at Guotai Junan International, expected the news to help boost Lenovo's share price today, after the stock last Friday reached a new record-high for this year.
Lenovo, which reported strong earnings in its fiscal first quarter to June on Friday, saw its shares climb to HK$11.64 in trading that day before closing at HK$11.56, up 2.66 per cent.
"We see a positive momentum for Lenovo as the company appears on track to close two big deals within its current fiscal year to March," Lai said.
Yang Yuanqing, the chairman and chief executive of Lenovo, has said that the firm's US$2.91 billion takeover of Google's Motorola Mobility business is also expected to be completed within this calendar year. This deal, the biggest-ever by Lenovo, remains under review by US regulators.
Both IBM and Lenovo confirmed on Saturday that their x86 server deal had been approved by the US Committee on Foreign Investments, an inter-agency panel that assesses national security implications of mergers, acquisitions and takeovers that could result in foreign control of any US firm. It is chaired by the Department of the Treasury.
