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IBM, Lenovo call off server deal talks: report

An employee installs a computer at the booth of IBM during preparations at the CeBit computer fair in Hanover, March, 4, 2013. REUTERS/Fabia
An employee installs a computer at the booth of IBM during preparations at the CeBit computer fair in Hanover, March, 4, 2013. REUTERS/Fabia

SAN FRANCISCO (Reuters) - IBM and Lenovo have called off negotiations over a multibillion-dollar deal in which the Chinese company would have bought Big Blue's low-end server business, Fortune magazine cited unidentified sources as saying on Wednesday.

Talks between the two companies were halted after disagreement over the valuation of a business that sells servers used to power corporate datacenters, the business magazine cited a person familiar with the discussions as saying. It added that the negotiations could still resume.

News of the talks surfaced last month, when industry newsletter CRN reported that IBM was looking to unload its "x86" server hardware division for as much as $6 billion. The Asian company, now ranked consistently among the world's three-largest PC makers, balked at that price, Fortune reported.

The proposed acquisition recalls a 2005 deal in which the U.S. enterprise computing giant sold its PC-making business to Lenovo for $1.25 billion.

The move vaulted a midsized Asian company into the top ranks of the global PC sector, and allowed IBM to effect a successful transformation into a software and solutions-oriented player.

Reuters has not independently confirmed the status of their negotiations, and IBM declined to comment on Wednesday.

Lenovo has said it was in preliminary talks about a potential acquisition but has not identified the target. Company representatives were not available for comment outside of normal business hours in Hong Kong on Wednesday.

(Editing by Andrew Hay)

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