Bain Capital Partners, Huawei Technologies acquire 3Com

New York: Private equity group Bain Capital Partners, LLC, is acquiring US telecom equipment manufacturer, 3Com Corporation, for $2.2 billion. As part of the deal, a minority stake will also go to Chinese rival Huawei Technologies, which according to a statement will make it "a commercial and strategic partner of 3Com".

Speculation about 3Com''s impending acquisition had been rife since July, amidst reports of it being a potential target for rival Nortel Networks and private-equity firms Bain and Silver Lake Partners.

The 3Com board of directors has unanimously endorsed the deal that will fetch shareholders $5.30 per share in cash, translating to a premium of 44 per cent over 3Com''s Thursday''s closing price.

A banking consortium comprising Citigroup Global Markets Asia Limited, UBS, The Hongkong and Shanghai Banking Corporation Limited, ABN AMRO Bank and Bank of China (Hong Kong) Limited would provide funding for the deal.

3Com has been panting in the race to keep up with market leader Cisco in recent years.

Amongst the forerunners of the telecom and internet boom in the 1990s, 3Com merged with US Robotics in 1997 in a deal that was estimated at $6.6 billion, then one of the biggest deals in the networking segment.

The acquisition has some of 3Com''s partners and vendors buzzing, expecting allocation of resources whose absence had initially stifled their growth. Analysts say putting more feet on the streets along with possible access to Huawei''s technology could help 3Com compete against Cisco.

Huawei is relatively unknown in the US, despite a 2003 joint venture with 3Com, termed H3, which initially focused on selling Huawei networking products, and later jointly developed products such as high-end routers and switches.

H3 became part of 3Com last November when the company bought out Huawei''s 49 per cent share at a price of $882 million.