Bain / 3Com Deal Off

By Greg McNevin

March 21, 2008: Bain Capital Partners affiliate LLC has announced that it is canning its merger with networking specialist 3Com, claiming a decision by the U.S. Government’s Committee on Foreign Investment in the United States (CFIUS) put the kibosh on the deal.

The company claims that CFIUS advised it of its intention to take action to prohibit the transaction due to national security concerns.

Announced in September 2007, the US$2.2 (AU$2.44) billion deal would have seen a 16 percent stake in the company go to China’s Huawei Technologies. 3Com, which has until now been forging a successful path into China, will no doubt have a more difficult road ahead of it now that the agreement is off.

“Bain Capital made several alternative proposals to 3Com that we believe could have satisfied the concerns raised by CFIUS,” the firm said. “We regret that we were unable to agree upon an alternative transaction.”

Some commentators believe the national security concerns are a little over the top, however, now that the deal is definitely off 3Com could be in an even more vulnerable position, both losing ground in China and perhaps even vulnerable to a takeover attempt itself.

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