3Com saved by HP - and Cisco

3Com has been trying to sell itself for quite some time, and has finally succeeded. While HP is the lucky buyer, 3Com really has Cisco to thank.

HP has agreed to acquire 3Com for $2.7 billion, which is at least an improvement over the $2.2 billion offered in early 2008 by Bain Capital Partners and Huawei Technologies. It could have been worse – after the way the economy has been over the last year, we could easily have seen the asking price decrease rather than increase.

The reason that early 2008 deal fell through was that it was becoming clear that the U.S. government would block it. 3Com makes some equipment deemed critical to our nation’s security, and we can’t have a company (Huawei) tied to a foreign government (China) in even partial ownership of such technology.

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3Com has been trying to sell itself for quite some time, and has finally succeeded. While HP is the lucky buyer, 3Com really has Cisco to thank.

HP has agreed to acquire 3Com for $2.7 billion, which is at least an improvement over the $2.2 billion offered in early 2008 by Bain Capital Partners and Huawei Technologies. It could have been worse – after the way the economy has been over the last year, we could easily have seen the asking price decrease rather than increase.

The reason that early 2008 deal fell through was that it was becoming clear that the U.S. government would block it. 3Com makes some equipment deemed critical to our nation’s security, and we can’t have a company (Huawei) tied to a foreign government (China) in even partial ownership of such technology.

The economy is probably why it took so long for 3Com to find a new buyer, as no one was really in a position to buy anyone else for quite a while.

But what likely gave HP a nice shove in the direction of acquisition was Cisco getting into the data center in a big way with its announcement in March. Despite Cisco’s attempts to play down the competition aspect, it has certainly become crystal clear that a company like Cisco can’t start building blade servers without turning a market onto its ear.

Even though HP has a strong networking business in its ProCurve line, apparently it must have felt the need for reinforcements. HP’s statement about the 3Com acquisition is all about the data center, all about the “converged infrastructure” that is being built for the data center, and it even rails against “a networking paradigm that has been dominated by a single vendor,” a clear shot at Cisco.

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