3Com buyout could still happen, report says

3Com buyout could still happen, report says

Bain, Huawei said to still be trying to address US security concerns

Bain Capital and Chinese network equipment company Huawei reportedly plan to soon resubmit an application seeking US approval for their proposed US$2.2 billion buyout of 3Com after an application last month was withdrawn when the three parties could not appease a US Treasury Department committee's security concerns.

According to the Wall Street Journal, the companies will propose the deal limit Huawei's access to some core US-related network products, including certain Ethernet products. Huawei would still hold a 16.5 per cent stake and the purchase price is expected to remain the same, according to the report.

3Com supplies the US government with some intrusion-detection systems from its TippingPoint subsidiary. Bain and Huawei proposed selling TippingPoint in an effort to gain US governmental approval of the deal.

3Com had already planned to spin out TippingPoint before the Bain/Huawei deal was announced.

Members of Congress had expressed concern about the security implications of Huawei's stake in the proposed acquisition since it was announced last fall. The companies subsequently withdrew their application from the Committee on Foreign Investment in the United States, an interagency committee chaired by the Secretary of the Treasury that reviews foreign investments in US companies to determine whether they might pose a threat to US national or homeland security.

The companies said they would continue discussions after pulling the application.

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