IBM Products United States, Inc. entered into a definitive asset purchase agreement to acquire x86 server hardware and related maintenance services business of International Business Machines Corporation (NYSE:IBM) for $2.3 billion in cash and stock on January 23, 2014. Lenovo will also assume certain liabilities in connection with the x86 server business as a part of the transaction. The consideration, which is subject to adjustments, includes $2.1 billion in cash to be paid at closing and 182 million of Lenovo Group shares being issued. The cash consideration payable by Lenovo is expected to be funded by a combination of Lenovo's existing cash on its balance sheet and additional bank borrowings. The acquired business includes 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, and PureApplication and PureData appliances.

The business had loss before and after taxation of $37.4 million and $26.4 million respectively for the period ending December 31, 2013. 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. Approximately 7,500 IBM employees around the world, including those based at major locations such as Raleigh, Shanghai, Shenzhen and Taipei, are expected to be offered employment by Lenovo.

The Directors of Lenovo consider that the terms of the agreement are fair and reasonable and in the interests of Lenovo and the shareholders as a whole. The transaction is subject to clearance with respect to the acquisition having been obtained from the Committee on Foreign Investment in the US, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 having expired or been terminated, the European Commission and The Ministry of Commerce of the PRC having issued a decision approving the acquisition and approval under the Canada Competition Act, the Stock Exchange granting the listing of and permission to deal in the consideration shares, no pending claim, suit, action or proceeding brought or threatened by any governmental authority challenging or seeking to restrain the transactions, no applicable law or legal restraint existing that would prohibit the transactions, certain fundamental representations of Lenovo and IBM remain true and correct in all respects and there has been no event that, individually or in combination with any other event, has or would reasonably be expected to have a material adverse effect on the business. The initial closing shall take place on the earliest date that is the last day of a calendar month and is no earlier than the third business day following the first date on which such conditions precedent are satisfied or waived, or at such other time as may be agreed.

As of March 20, 2014, the transaction was approved by Competition Commission of India. As of July 3, 2014, the transaction is expected to close by the end of 2014. The Chinese Ministry of Commerce's anti-monopoly bureau approved the transaction. The transaction is still subject to approval of U.S. regulatory authority. The transaction is expected to be completed by the end of the year 2014. The deal got approved by US Federal Government on August 15, 2014. On September 29, 2014, all conditions to the transaction have been satisfied and the transition will begin on October 1, 2014 in countries that are part of the initial closing, which includes most major markets. $1.8 billion will be paid in cash along with 182 million shares in consideration. The transaction is expected to close in most other countries later this year, with the few remaining countries following in early 2015. On September 29, 2014, Lenovo announced that it will close the deal on October 1, 2014.

Credit Suisse and Goldman Sachs acted as financial advisors for Lenovo. Christopher Austin, Glenn McGrory, Freeman Chan George F. Schoen, Jennifer S. Conway, Keith Hallam, Nicholas A. Dorsey, Aaron D. Suh, Allison M. Wein, Maya A. Rosenthal Larrea, Kenneth S. Gerold, James C. Pickel Jr., Jarrett R. Hoffman, George Schoen, Jennifer Conway, Matthew Cantor, Andrew Carlon, Rachel H. Kiwi and Joyce Law, J. Leonard Teti II and Matthew Morreale of Cravath, Swaine & Moore LLP acted as legal advisors to International Business Machines Corporation. Christopher Austin, Glenn McGrory, Brian Byrne, Christopher Cook, Cunzhen Huang, Richard Pepper and Freeman Chan of Cleary, Gottlieb, Steen & Hamilton LLP acted as legal advisor for Lenovo. BofA Merrill Lynch acted as financial advisor to International Business Machines. O'Melveny & Myers LLP acted as the legal advisor to International Business Machines Corporation. Broad & Bright acted as legal advisor to International Business Machines in the deal. Susan Hutton and Michael Laskey of Stikeman Elliott LLP acted as legal advisors for IBM Products. Susan Ning and Hazel Yin and Kailun Ji of King & Wood acted as legal advisors for IBM Products in China. Jamie Barr, Janet McDavid, Logan Breed, Ciara Kennedy-Loest, Adrian Emch, Ian Jacobsberg, Caitlin Russo, Lauren Battaglia and Christine Habeeb, Jean-Michel Coumes, Dimitris Vallindas, John Embleton, Sherry Hu, Janine Reddi, Tamsin Doran, Jun Wei, Sherry Gong and Rachel Brandenbiurger of Hogan Lovells acted as legal advisors to International Business Machines Corporation. Samir Gandhi, Kamya Rajagopal, Bidisha Das, Rahul Satyan, Karan Vir Khosla, and Shashank Sharma AZB & PARTNERS acted as legal advisors for IBM Products United States. David Fagan, Mark Plotkin, Stuart Eizenstat and Jonathan Wakely of Covington & Burling LLP acted as legal advisors for Lenovo.