Lenovo sees IBM server deal by end of this year

A Lenovo outlet is seen in Hefei. The Chinese personal-computer maker expects to complete its acquisition of IBM’s low-end server business by the end of this year.

Dow Jones/Hong Kong

Chinese personal-computer maker Lenovo Group still expects to complete its acquisition of International Business Machines Corp’s low-end server business by the end of this year, its chief executive said, even as the US government is investigating possible national-security risks related to the deal.

“There is no change to the plan,” said Lenovo chief executive Yang Yuanqing at a news conference after the company’s annual shareholder meeting yesterday.

Lenovo, which last year overtook Hewlett-Packard Co as the world’s largest PC maker, is trying to obtain regulatory approvals for two multibillion-dollar acquisitions: a $2.3bn deal to buy IBM’s x86 low-end server unit and a $2.91bn deal to buy Google Inc’s Motorola Mobility. After announcing the two deals in January, Lenovo said it expected both deals to close by the end of this year.

Still, people familiar with the matter told The Wall Street Journal last month that US security officials are looking into risks related to the IBM server deal, due to concerns that the servers, used by some parts of the US government, could be accessed remotely by Chinese hackers.

“We are still confident that we can complete the two transactions by the end of this year,” Yang said. “We are making very good progress in obtaining approvals for the deals.”

Yang didn’t comment on whether the US government is raising any security concerns about the IBM server deal; he said he isn’t in a position to share details of the company’s discussions with regulators. But he rejected the view that Lenovo’s products could raise security concerns. “If you look at our history, with domestic and overseas clients, there have never been any issues regarding security,” he said.

The US government has been looking into the possible national-security implications of Lenovo’s proposed acquisition, in part because IBM’s x86 servers are used in US communication networks and in data centres that support the Pentagon’s computer networks, according to people familiar with the matter.