Hewlett-Packard Buying 3Com for $2.7 Billion

Another day, another megadeal: this time it's HP taking on Cisco with a $2.7 billion acquisition of network gear-maker 3Ccom.

Computer maker Hewlett-Packard—currently the number-one PC maker on the planet—has announced it is buying 3Com for a mammoth $2.7 billion. 3Com mamnufactures networking gear like routers and switches, and provides security and network management services; the acquisition puts HP in a position to take on Cisco, the dominant player in networking hardware.

“Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor,” said HP’s Enterprise Servers and Networking executive VP and general manager Dave Donatelli, in a statement. “By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry.”

HP says the acquisition will enable the company to significantly expand the switches and routers it can offer to customers, and will particularly strengthen HP in the Chinese market, which is one of the world’s fastest-growing IT infrastructures. HP is already no stranger to datacenters, and has long manufactured server and storage solutions aimed at everything from small businesses to global enterprises. By adding a high-end networking gear maker, HP can more easily position itself as an all-in-one integrated solution. The acquisition also marks another move by HP to diversity into markets that are more profitable than the cut-throat PC business.

3Com has been looking for a buyer for at least a year; one suitor was China’s Huawei Technologies, but the deal apparently fell apart over national security concerns revolving around 3Com’s Tipping Point security technology.

The 3Com acquisition comes as HP is still working to complete its mammoth buyout of Electronic Data Systems back in May 2008 for a whopping $13.9 billion.