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

Thu Apr 18, 2013 10:02pm EDT

The sign at the IBM facility near Boulder, Colorado September 8, 2009. REUTERS/Rick Wilking

The sign at the IBM facility near Boulder, Colorado September 8, 2009.

Credit: Reuters/Rick Wilking

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(Reuters) - Lenovo Group (0992.HK) said on Friday it was in preliminary talks about a potential acquisition, following a media report that IBM Corp (IBM.N) 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. (link.reuters.com/zad57t)

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.

(Reporting by Tej Sapru in Bangalore and Denny Thomas in Hong Kong; Editing by Phil Berlowitz and Richard Pullin)

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