News EN - 21.03.08

Bain Halts Bid for 3Com

Washington 03/21/08 (www.emfis.com)
China’s Huawei Technologies and its partner Bain Capital Partners LLC have abandoned a $2.2 billion bid for 3Com Corp. after failing to satisfy a federal agency that the transaction might not harm national security. The deal would have given Huawei a 16 percent stake in 3Com.  Huawei and 3Com have done business together in the past, forming a joint venture.

The Committee on Foreign Investment in the United States (CFIUS) informed Bain it intended to block the transaction, Bain said.  The transaction had raised alarm flags with the U.S. government due to the facts that 3Com manufactures network security software, and Huawei was founded by Ren Zhengfei, a former soldier in the People’s Liberation Army.

3Com said it does not believe Bain’s reasons are valid grounds for termination of the deal, and that they would seek  a $66 million breakup fee specified in the merger agreement.

Source: EMFIS.COM, Author: (es)