3Com falls to private equity and Chinese takeover

Bain Capital and Huawei Technologies team up to buy the mid-market network equipment maker, at a bargain price of $2.2 billion.

3Com, the enterprise and small business network hardware maker has accepted a $2.2 billion (1.1 billion) takeover deal from private equity house Bain Capital and China's Huawei Technologies. The takeover comes after 3Com announced net losses of $18.7 million for the fiscal second quarter ending 30 August.

Bain Capital, a private asset management firm worth over $50 billion (25 billion), will purchase 80 per cent of 3Com's shares. Huawei, a Chinese networking and telecoms equipment maker and former partner of 3Com, will purchase 16.5 per cent of the remaining shares.

The deal was struck even after 3Com announced net losses for the second consecutive fiscal quarter. "Net loss in the quarter was $18.7 million, or $0.05 per diluted share, compared with a net loss of $14.1 million, or $0.04 per diluted share, in the first quarter of fiscal year 2007." The deal was accepted for $5.30 per share, a significant premium on the closing price of $3.68.

It has been increasingly difficult for 3Com to compete in a market dominated by networking giants like Cisco. Their relative sales share in the market has been decreasing since 2000, and independent market researchers have repeatedly ranked them at the bottom of the industry. In 2006, Dell'Oro group placed 3Com fifth out of five in an industry revenue share ranking behind Cisco, HP ProCurve, Nortel, and Foundry.

3Com declined to comment further at the time of writing on how the deal would affect users and future product plans.

Featured Resources

How virtual desktop infrastructure enables digital transformation

Challenges and benefits of VDI

Free download

The Okta digital trust index

Exploring the human edge of trust

Free download

Optimising workload placement in your hybrid cloud

Deliver increased IT agility with the cloud

Free Download

Modernise endpoint protection and leave your legacy challenges behind

The risk of keeping your legacy endpoint security tools

Download now

Most Popular

How to move Microsoft's Windows 11 from a hard drive to an SSD
Microsoft Windows

How to move Microsoft's Windows 11 from a hard drive to an SSD

4 Jan 2022
Microsoft Exchange servers break thanks to 'Y2K22' bug
email delivery

Microsoft Exchange servers break thanks to 'Y2K22' bug

4 Jan 2022
How to boot Windows 11 in Safe Mode
Microsoft Windows

How to boot Windows 11 in Safe Mode

6 Jan 2022