3Com Reworks Its Huawei, Bain Acquisition Terms - InformationWeek

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3Com Reworks Its Huawei, Bain Acquisition Terms

Shareholders are scheduled to meet again March 7 to address the concerns of a federal government panel.

Huawei Technologies, 3Com, and Bain Capital will resubmit their application for the $2.2 billion buyout of 3Com, according to participants in the proposed deal.

3Com reported that its Friday shareholders meeting will be reconvened March 7 with the goal of developing a new application that will address the concerns of the Committee on Foreign Investment in the U.S. (CFIUS). CFIUS, a federal government panel, and some members of Congress had expressed concern over the Chinese firm's involvement in the new company.

"3Com continues to work with Bain Capital Partners to construct alternatives that would address CFIUS' concerns regarding the company's pending merger transaction with affiliates of Bain Capital Partners," 3Com said in a release. The company noted that it immediately adjourned its stockholders meeting on Friday.

The complex deal would involve Bain Capital and Huawei buying out 3Com with Huawei owning 16.5% of the resulting firm; 3Com has been marketing some Huawei products for years. After the initial attempt to consummate the acquisition collapsed last week, 3Com and Huawei said they will continue to honor their long-standing commitments. The joint operation is continuing to develop and release new products.

One stumbling block of the deal is represented by 3Com's Tipping Point unit, which supplies network-based intrusion prevention systems. Tipping Point could be spun off to mollify the CFIUS, although that wouldn't likely take place until -- and if -- a new acquisition bid is finalized.

Bain has had its eye on carrying out additional deals with Chinese companies interested in expanding their U.S. business; a successful wrap up of the 3Com-Huawei deal would represent a template for additional deals.

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