Investment Firm Buys Networking Vendor 3Com

Network equipment maker 3Com has agreed to be acquired by private equity firm Bain Capital for $2.2 billion.

Network equipment maker 3Com announced today that it was agreed to be acquired by private-equity investment firm Bain Capital for $2.2 billion.

“The 3Com Board of Directors and senior management team have thoroughly reviewed our strategic alternatives and have determined that the agreement with Bain Capital provides the best value for 3Com shareholders,” said 3Com president and CEO Edgar Masri, in a statement. “We believe that this agreement better positions 3Com to establish itself as a global networking leader, which will benefit our employees, our customers and our partners.”

Affiliates of former joint venture partner Shenzhen Huawei Investment & Holding Co. Ltd. will take an unspecified minority stake in the company, and also act as a strategic and commercial parter. The joint company was launched in 2003 in an effort to challege Cisco’s dominance in networking systems: they company is now known as H3C Technologies. Less than a year ago, 3Com terminated its join venture with Hong Kong-based Huawei by buying out its 49 percent stake in the joint venture for $882 million. Huawei accounts for about 30 percent of H3C’s business.

The deal is not expected to impact 3Com’s plans to spin off its security division, Tipping Point.

Converting to a private company may give 3Com additional flexiblity to retool its long-term business model, rather than having to be focused on quarter-by-quarter profit-making in order to satisfy shareholders. 3Com would be the third largest public company to go private this year: in May, technology reseller CDW was taken private for $7.3 billion; a month later, telecommunications vendor Avaya went private for $8.2 billion.

The 3Com deal is expected to close in the first quarter of 2008.