Opinion | Lenovo raises funds, IBM servers in sight?
Lenovo's upcoming debt offer is likely to raise US$1 to $2 billion, and will be used to help finance its desired purchase of IBM's low-end server business
Interestingly, the list of investment banks includes two from Japan, indicating the company will aggressively look for buyers in that market. Lenovo says the debt will be used partly to finance its aggressive global M&A campaign of the past two years, which has included purchases in Japan, Germany and Brazil. While no amount is given, the number of banks participating indicates the figure could be quite large, most likely over US$1 billion and perhaps even larger than US$2 billion.
All of this points back to Lenovo's strong desire to purchase the IBM's low-end server business, as the Chinese tech giant looks to diversify beyond its core PC business. Lenovo chief Yang Yuanqing has made it clear numerous times this year that traditional PCs are no longer his company's main focus, as he repeatedly stresses that his biggest rivals are smartphone and tablet PC leaders Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930). Servers could be another important growth area, as such computers are one of the main components for web hosting and cloud computing.
Despite the breakdown, I predicted that talks would quickly resume after each company had time to re-think its position, as both really want this deal to happen. This announcement of this major new debt offering seems to be Lenovo's latest signal to indicate it hasn't given up its aim of reviving the deal, and that talks have already either restarted or that it intends to make a new offer in the near future.