Lenovo Group Ltd. (992 ▲2.75% 10.46) buys International Business Machines Corp. (IBM ▼-1.20% 187.81)’s low-end server business.

Lenovo will pay $2.07 billion in cash and the rest with stock of the Beijing-based PC maker, the company said in a statement to the Hong Kong exchange on Thursday.

The acquisition will allow Lenovo to diversify revenue away from the shrinking PC business and remodel itself as a growing force in mobile devices and data storage servers. Analysts said Lenovo will likely find it easier than International Business Machines (IBM) to sell the x86 servers to Chinese companies as Beijing tries to localise its IT purchases in the wake of revelations about U.S. surveillance.