3Com Buyout Is Dead--At Least for Now
3Com announced today that it has withdrawn the proposed private equity buyout of the company (by Bain Capital and Huawei) from the regulatory approval process. The company's statement appears to indicate that the stumbling block was the foreign-ownership component of the deal.
In its statement, 3Com said that Bain and Huawei had withdrawn a joint filing to the Committee on Foreign Investment in the United States (CFIUS). The announcement quoted 3Com President and CEO Edgar Masri thus:
We are very disappointed that we were unable to reach a mitigation agreement with CFIUS for this transaction. While we work closely with Bain Capital Partners and Huawei to construct alternatives that would address CFIUS' concerns, we will continue to execute our strategy to build a global networking leader.
Concerns about the deal's ability to gain regulatory approval appeared as far back as last December. It's been widely reported, as recently as today, that the sticking point was regulators' concerns about foreign ownership of Tipping Point, which makes intrusion protection systems (IPSs) for the government, among other customers. 3Com had proposed a spinoff of Tipping Point even before the private equity deal was announced last year, but apparently a renewal of this offer wasn't enough to satisfy officials.
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