UPDATE 1-Lenovo says in potential M&A talks; report of IBM server deal

Thu Apr 18, 2013 9:48pm EDT

* Lenovo says in early acquisition talks, no target named

* Report says in talks on IBM x86 server business

* Lenovo bought IBM's PC business in 2005

April 18 (Reuters) - Lenovo Group said on Friday it was in preliminary talks about a potential acquisition, following a media report that IBM Corp was negotiating the sale of its x86 server hardware business to the Chinese computer maker.

IBM wants $5 billion to $6 billion for the business, which sells low-priced servers traditionally used to power large corporate data centers, said technology news site CRN, citing a high ranking industry executive.

Lenovo did not identify the acquisition target.

"As at the date of this announcement, no material terms concerning the potential acquisition Have been agreed," the company said in a statement to the Hong Kong stock exchange.

Beijing-based Lenovo acquired IBM's PC unit in 2005 in a $1.25 billion stock and cash deal.

IBM Chief Financial Officer Mark Loughridge said the company would not respond to rumors when asked about the CRN story on a post-earnings conference call on Thursday.

IBM, the world's largest technology services company, reported an increase in first-quarter earnings, but missed estimates due to the depreciation of the Japanese yen.

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