A $2.2 billion deal that has Bain Capital in partnership with Chinese networking powerhouse Huawei Technologies buying 3Com, is creating concern among U.S. politicians that the deal will endanger U.S. national security.
During an interview with the Financial Times regarding those security concerns, Xu Zhijun - chief marketing officer of Huawei Technologies said through an interpreter:
"That would be bullshit."
Pressed to clarify his remarks further, Xu Zhijun added:
"Because we only just take 16.5 per cent."
When asked what message he had for the U.S. politicians voicing concern about the deal, Xu Zhijun said:
"Cisco’s equipment is everywhere in China. If the U.S. government is concerned about Huawei, if some of the lawmakers are concerned about Huawei, Cisco is everywhere within China. Who should be more concerned?"
He stressed that Huawei would be a minority shareholder of 3Com, with no final decision making powers, even if it exercised an option to raise its stake to 21.5 percent and described the rationale behind Huawei’s role in the 3Com deal as a "business investment" from which it hoped to get "investment returns".
 3Com sells intrusion prevention technology to the U.S. Department of Defense to protect the Pentagon against cyber attack. The Pentagon believes that hackers in China conducted a massive cyber attack on its systems last year. |
Thaddeus McCotter - chairman of the Republican policy committee in the U.S. House of Representatives has been urging U.S. authorities to deny Huawei any part in the 3Com deal, describing the existing buyout proposal as a stealth assault on America’s national security.
The Committee on Foreign Investment in the U.S., a 12-agency group with the authority to recommend the White House block or alter terms of deals that involve national security, is expected to give its opinion of the deal this month. 3Com and Bain expect the deal to close by March 30.
Wall Street appears to be betting that the deal will go through.
To gain approval of the deal, one of the proposals under active discussion among the companies and the government is the divestment of Tipping Point, a unit of 3Com, which makes network security software.
Whom do you think would do well to purchase Tipping Point from 3Com?
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