After Deal Collapses, Huawei Says Normal Business With 3Com Will Continue - InformationWeek

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After Deal Collapses, Huawei Says Normal Business With 3Com Will Continue

The complex deal was frowned upon by the Committee on Foreign Investment in the U.S., and the three deal participants withdrew their application before CFIUS formally nixed the acquisition.

Huawei Technologies broke its silence Monday on the collapse of its participation in an attempt to acquire 3Com, stating that the two firms will continue to comply with the agreements that currently exist between them.

"Due to the complexity of the acquisition process, the increase in acquisition costs, and the significant change in stock market conditions since last year, Bain Capital and Huawei have announced their intention to withdraw their application relating to the proposed acquisition," Huawei said in a statement.

The complex deal was frowned upon by the Committee on Foreign Investment in the United States, and the three deal participants -- 3Com, Huawei and Bain Capital -- withdrew their application before CFIUS formally nixed the acquisition.

The acquisition was complex to begin with, but 3Com's national security software unit, Tipping Point, caused Washington officials to question the deal. 3Com had promised there would be no compromise of sensitive information resulting from the proposed acquisition.

If the deal had gone through, Bain would have had controlled the resulting company with Huawei holding less then 17% of 3Com ownership. Huawei's connections to China's government were cited by U.S. interests opposed to the deal, and when CFIUS said it would place the deal under increased scrutiny, it served as a signal that rejection loomed, according to media reports.

What will happen to 3Com now that the deal has been jettisoned? The company has continued to announce new products and to conduct its business as usual.

"3Com empathizes with the decision of Bain Capital and Huawei, and has taken contemporaneous steps to withdraw its application relating to the transaction," Huawei said in its statement. "Huawei and 3Com will continue to maintain their friendly cooperation and comply with the existing agreements between the parties."

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