Networking Equipment Manufacturer 3Com Changes Hands

Networking equipment and general communication hardware manufacturing company 3Com will soon change hands as the company announced that it will be bought by two other companies, the Chinese Huawei Technologies, itself a communication equipment producer and the equity company Bain Capital.

The deal is reported to have been signed for $2.2 billion and the two companies will pay around $5.3 per share for the entire available 3Com stock, which represents a premium of 44 percent over the last closing price on the Nasdaq trade market that was $3.68.

Huawei Technologies is not at its first encounter with the Massachusetts-based networking equipment company 3Com, as the Chinese outfit was once partnered with the American firm in a joint venture, but in March 3Com decided to buy the entire venture for itself and offered $882 for Huawei's 49 percent stake in H3C, the jointly developed company. On the other hand, Bain Capital is one of the largest privately held equity firms in the world, while the Chinese company is the most important communication manufacturer from that part of the world.

H3C, the joint venture between 3Com and Huawei Technologies, is a provider of IP-based products and it is about the only profitable part of a company in poor financial health that failed to deliver a profit in over seven years. However things were looking slightly better for 3Com in recent times (June) as the company posted increased revenues with 22 percent over the same period last year. As the Chinese company is interested in expanding its market reach and portfolio, Bain Capital is too interested in technology as it recently purchased Royal Philips Electronics' semiconductor unit for 3.4 billion Euro and Texas Instruments' sensors and controls division for $3 billion in 2006.

Despite now being far behind the market leader in the networking field, Cisco Systems, 3Com is one of the companies that dates way back as it was founded by Robert Metcalfe (the parent of Ethernet technology) in 1979 and in 1987 the firm merged with Bridge Communications, a smaller company founded by the current 3Com's chairman Eric Benhamou.