logo

3Com Sues Bain Capital For $66 Million Failed Takeover
By: Money Morning   Sunday, August 03, 2008 8:41 PM

Vote for next session
The next market session will close:

3Com Corp. (COMS) is suing Bain Capital Partners LLC over a $66 million termination fee that resulted when the private equity firm and Huawei Technologies Co. backed away from an attempted takeover. 

In September 2007, China’s No. 1 network-equipment maker and Bain Capital launched a $2.2 billion takeover bid for 3Com. The deal stipulated that Huawei would receive a 16% stake in 3Com, leaving the rest to Bain. However, complications arose when the U.S. government expressed reservation about the deal and the possible breach of national security.

The fact that Shenzhen-based Huawei was founded by Ren Zhengfei, a former officer in the Chinese army, raised suspicion about the company’s intentions for 3Com, which has its own ties to the Pentagon.

3Com’s Tipping Point unit makes security software for the U.S. government, and policymakers worry that 3Com’s networking technology would allow China to eavesdrop on U.S. domestic conversations. Another concern was that the company’s encryption technology would make Chinese networks harder to tap.

Bain broke off a deal with China’s Huawei Technologies in March when it became apparent that their application to the Committee on Foreign Investment would not be approved. Now, 3Com is suing for a $66 million breakup fee.

“3Com now seeks the benefit of the bargain that was struck, and to require Bain Capital’s Newco to live up to its commitments in the merger agreement by paying the termination fee,” lawyers for Marlborough-based 3Com said in a statement.


(0)
No Comments
Post Comment
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
   
 
 
 
 
   
 

The above story is the opinion of the author only and it does not reflect iStockAnalyst opinion. Further, the author is not personally advising you regarding the suitability of the story for your investment needs. In no event iStockAnalyst will be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from or arising out of, or in connection with the use of this information. Please consult your investment advisor before making any investment decision.
  
Advertisement
Popular Articles
Related Press Releases
Advertisement
Partner Center
Recent Articles by Money Morning



Subscribe to Email Alerts rss feed or RSS feeds rss feed for articles from more than 500 contributors, press releases, SEC filings and full text news from more than four thousand sources.
Fundamental data is provided by Zacks Investment Research, market data is provided by AlphaTrade. , and Commentary and Press Releases provided by Quotemedia