Bain calls off 3Com deal as US objects to Chinese stake

21 February 2008

Mumbai: Bain Capital Partners has called off a deal with a Chinese investor to acquire 3Com Corp for $2.2 billion, sources familiar with the development said.

Bain withdrew its application for US security approval of the deal as it was unable satisfy concerns of the Committee on Foreign Investment in the United States (CFIUS).

The deal would give China's Huawei Technologies Co Ltd as much as a 20.5 per cent stake in the network equipment maker.

Bain and 3Com announced withdrawal of the deal in its current form, although they said they were still in discussions and the proposed transaction had not yet been terminated.

Bain had, in September last year, agreed to buy 3Com in a deal that would also give Huawei Technologies a 16.5 per cent minority stake. Huawei, however, had the option to increase its stake in 3Com by up to an additional 5 per cent.

The deal was subject to scrutiny by CFIUS, an interagency US governmental panel that reviews corporate acquisitions by foreign buyers.