Ministry OKs Lenovo IBM server unit deal

The anti-monopoly bureau with China's Ministry of Commerce has approved personal computer (PC) maker Lenovo Group's proposed $2.3 billion deal to buy IBM Corp's low-end server business, according to a statement released Friday by the ministry.

The deal, announced in January, is expected to be completed by the end of this year, Lenovo Chief Executive Yang Yuanqing told a shareholder meeting Wednesday. But it still requires US regulatory approval.

If approved, the deal will make Lenovo become the world's third largest server manufacturer with a 14 percent share in the global market, analysts said.

Yang estimated that the server business will bring annual revenue of $5 billion to Lenovo and increase the world's largest PC maker's profitability, he told an analyst conference call on May 22 after Lenovo posted its annual financial performance.

Lenovo posted a 14.3 percent year-on-year growth in revenue to $38.7 billion in the fiscal year of 2013 ending on March 31, 2014. Its net profit grew by 28.7 percent to $817 million.

As the PC business is expected to bring limited growth for Lenovo, the company has launched a "PC-plus" strategy since 2012, shifting its focus to the consumer market with smartphones and tablets as well as to the enterprise-level market with servers and storage products.

Lenovo is also seeking regulatory approval for another $2.91 billion deal to buy Motorola Mobility from Google Inc. Yang also expected Wednesday that the deal to be completed within the year, and he earlier set a target of selling 100 million smartphones one year after the acquisition.

Lenovo sold 50 million smartphones under its own brand in 2013.