3Com reportedly being sold to Bain, Huawei

Confirming earlier rumors, 3Com is being sold to Bain Capital and one-time partner Huawei Technologies for a reported $2 billion in a deal expected to be announced later this morning, the Wall Street Journal is reporting.

From the Journal:

The cash deal values Marlborough, Mass.-based 3Com at more than $5 a share, the person said. Huawei Technologies, the Chinese networking giant, will take a minority stake in 3Com as part of the deal.

The deal signals that the LBO market isn't totally moribund. A price of, say, $5.50 a share would represent a roughly 50% premium to 3Com's closing share price yesterday of $3.68, up 18 cents.

Last year 3Com purchased the joint venture it had established with Huawei for $882 million. CEO Edgar Masri, a longtime 3Com veteran who returned to lead the company in 2006, told Network World earlier this year that his interest in Chinese business practices was among his reasons for taking the job:

It came down to three key points. I had been studying and was very interested in China and the rise of China for over two years before rejoining 3Com. As a venture capitalist, I went to China three times. I saw a great interest on the venture capital side. I started to study the language. So the rise of China, the ability to do business with China, and leverage that, was a very intriguing opportunity. I was not looking for a job, because I had joined Redline as a chief operating officer. That company was going public, and did go public just a few months ago.

Earlier this year the company announced a major reemphasis on the enterprise networking market with an initiative called Open Service Networking.

Today's news will presumably alter 3Com's plans to spin out Tipping Point, although that remains to be seen pending the announcement later today.

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