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Huawei bid for 3Com hits roadblock

Posted: 25 Feb 2008 ?? ?Print Version ?Bookmark and Share

Keywords:3Com takeover? acquisition?

China telecommunications firm Huawei Technologies' acquisition of 3Com took a setback as 3Com Bain Capital withdrew a takeover filing with the Committee on Foreign Investment in the United States (CFIUS). Huawei and Bain announced in October 2007 plans to acquire 3Com for $2.2 billion in cash.

This is according to an Agence France-Press report, which stated that Bain and American issued a joint statement saying they "remain committed" to Bain's proposed $2.2 billion takeover of 3Com.

The U.S.-based companies withdrew the takeover application with CFIUS despite 3Com's assertion last year that the deal would not threaten U.S. national security. Huawei will gain a 21.5 percent stake in 3Com if Bain's takeover of the computer networking group is firm is approved by the U.S. government.

3Com executives had stressed that the China telco would gain no "operational control" over the firm should the deal push through, but 3Com and Bain withdrew the filing due to CFIUS concerns.

3Com spokesman, John Vincenzo, disclosed the company held several discussions with the CFIUS prior to withdrawing the takeover filing. In a regulatory filing with the Securities and Exchange Commission in October, 3Com claimed that Huawei will not gain access to sensitive U.S.-origin technology or U.S. government sales as a result of the transaction.

Edgar Masri, 3Com president and CEO expressed disappointment with the developments but said the companies would address government concerns about the potential tie-up.

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