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Monday, 01 October 2007 13:17

3Com sold

Written by David Stellmack

Image

Chinese flex muscle and make acquisition


 

The 3Com Corporation, a leading provider of secure, converged voice and data networking enterprise solutions, has announced that it will be acquired in a $2.2 billion cash deal merger by affiliates of equity firm Bain Capital, LLC, a global private investment firm.

Representatives of Bain Capital in Hong Kong indicated that Bain Capital will hold more than 80% interest of 3Com, while Huawei Technologies of China will hold the remaining minority stake and become a commercial and strategic partner of 3Com.  Huawei previously was part of a joint venture with 3Com for Chinese network infrastructure manufacturer, H3C Technologies Company Ltd.  In March 2007 3Com took full ownership of H3C by purchasing Huawei’s share of H3C for $882 million.  It is ironic that H3C will now again be part of Huawei.

And to show that politics really do make strange bedfellows, former Governor Mitt Romney, now running for U.S. President in 2008 as a Republican candidate, was the head of Bain Capital for 14 years.  The company founder of China’s Huawei, Ren Zhengfei, is a former officer of the People's Liberation Army of China. While Zhengfei claims to only own 1% of Huawei, the remainder is owned by an unidentified “union.” 

In 2000 the U.S. government Central Intelligence Agency (CIA) accused Huawei and two other Chinese companies of illegally selling communications systems and switches to Iraq (telecom switches and fiber optic cable) while Saddam Hussein was still in charge.  The illegal sale of technological equipment in Iraq unfortunately got buried in the hunt for those elusive “weapons of mass destruction” and was not heard about again.

It is also quite ironic that the paths of a former Chinese Communist party member and a U.S. candidate for President have crossed indirectly, but not really that far apart, in this huge acquisition of U.S. technology.

Read more here.

Last modified on Monday, 01 October 2007 13:27

David Stellmack

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