3Com has to try again

Acquisition deal rejected

3Com's plans to get acquired by Bain Capital Partners and Huawei Technologies fell through this week, crumbling under U.S. government scrutiny about Huawei's ties to the Chinese government.

You see, 3Com makes network equipment that is critical to our national security, the reasoning goes, so we can't have a company tied to a foreign government involved with 3Com in any way - even in a minor, non-operational way.

Such reasoning infuriated those involved with the deal. Xu Zhijun, chief marketing officer at Huawei, was quoted by the Financial Times - by way of an interpreter - as describing the concerns as something along the lines of cow excrement.

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3Com's plans to get acquired by Bain Capital Partners and Huawei Technologies fell through this week, crumbling under U.S. government scrutiny about Huawei's ties to the Chinese government.

You see, 3Com makes network equipment that is critical to our national security, the reasoning goes, so we can't have a company tied to a foreign government involved with 3Com in any way - even in a minor, non-operational way.

Such reasoning infuriated those involved with the deal. Xu Zhijun, chief marketing officer at Huawei, was quoted by the Financial Times - by way of an interpreter - as describing the concerns as something along the lines of cow excrement.

The $2.2 billion deal was brought down even though Huawei would only have a 16.5% stake in the company. The charge was led by U.S. Rep. Thaddeus McCotter (R-Mich.), who was widely quoted as the voice of opposition to the deal. 

Interestingly, the sticking point appears to be Tipping Point, the part of 3Com that is involved with making the intrusion-detection systems that have national security implications. (3Com bought Tipping Point just a couple of years ago.) 

But Heidi Moore writes in her Wall Street Journal blog that 3Com had already looked into spinning off Tipping Point, talked to seven different potential buyers for Tipping Point and evaluated what 3Com's worth would be without that part of the company.

So, what happens now for 3Com? The company has been struggling for a long time. The acquisition appeared to be an exit strategy out of a downward spiral. Time for a Plan B.

Read more about lans & wans in Network World's LANs & WANs section.