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Huawei In 3COM Acquisition |
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Written by Adam Gosling
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Tuesday, 02 October 2007 |
Long-struggling network hardware company, 3Com has bitten the bullet and agreed to be acquired by a consortium that includes affiliates of Private Equity company Bain Capital Partners and former Joint Venture partner Huawei. The two plan to take on networking giant Cisco systems with low-cost networking hardware.
Valued in the deal at US$2.2 billion 3Com Corporation a premium of
44 per cent over the company's closing price of $3.68 on September 27,
2007. While Bain is the senior partner in the bid, "affiliates of
Huawei Technologies" will acquire a minority interest in the company
which reports put at a little over 16 per cent.
The deal is a return home for some 3Com employees who were part of a
joint venture between 3Com and Huawei called H3C Technologies. In March this year 3Com completed the acquisition of Huawei's
49 per cent stake in the joint venture for more than US$88o million.
Analysts suggest that Huawei wants to use its new stake in 3Com to increase its exposure and access in the vital North American market where 3Com has had success with its line of SMB and branch office IP Telephony systems. It is also suggested that the manufacturing might Huawei brings to the new venture will allow the new owners to take on Cisco with low-priced networking gear without having to answer to shareholders.
3Com was one of the first networking companies back in the 1970's and has enjoyed highs as well as significant lows in the past 30 years. In the post dot com era, 3Com refocussed its business on the small to medium entperprise with an emphasis on security and convergence.
Combined with H3C, 3Com has annual revenue of US$1.3 billion and more than 6,000 employees working in over
40 countries.
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