Lenovo and IBM have agreed the sale of IBM's x86 server business to Lenovo for $2.3bn, following numerous rumours of the move.
The deal will see IBM sell its entry-level and mid-range server and storage products and their associated maintenance and servicing business.
Lenovo's acquisition will include IBM's System x, BladeCenter, Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and their associated software as well as its blade networking and maintenance operations.
IBM, meanwhile, will retain its high-end server products, which include its System z mainframes, Power Systems, Systems Storage, Power-based Flex servers, PureApplication and PureData appliances. IBM will also continue to develop software such as Linux for x86 platforms.
The deal also includes a strategic OEM agreement for Lenovo to sell IBM's entry level and mid-range storage products including Storwize disk and tape storage systems, General Parallel File System software and SmartCloud Entry.
Around 7,500 IBM employees will be offered jobs with Lenovo, the two firms said.
Steven Mills, IBM's group executive for Software and Systems, said the deal would allow his company to invest in other areas. "This divestiture allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, big data and cloud. IBM has a proven record of innovation and transformation, which has enabled us to create solutions that are highly valued by our clients," he said.
Lenovo chief executive Yang Yuanqing added: "This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy. With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long term, just as we have done with our worldwide PC business."
IBM's mid-range hardware business has seen steady declines in recent quarters, with the company's most recent financial results showing a 26 percent revenue drop for hardware. Senior IBM executives said they would not be accepting their annual bonuses for 2013.
The news comes nine years after Lenovo bought out IBM's PC business, including its ThinkPad device range.
IBM has been focusing its attention on high-end hardware and cloud products in recent months, buying out cloud platform SoftLayer in June 2013 and investing $1bn in a business unit based on its Watson supercomputer and $1.2bn in a range of data centres around the world earlier in January.
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