3Com has announced that it will pursue a $66 million (€42.70 million) termination fee from former suitor Bain Capital, which just yesterday said it was backing away from a $2.2 billion take-private of the secured networking company.
Shareholders will vote today on whether to accept the terms of the original merger, a necessary legal condition for the company to collect the breakup fee.
Bain dropped its bid to acquire 3Com amid mounting regulatory scrutiny by the Committee on Foreign Investment in the United States.
At issue was the past of Chinese networking company Huawei, a commercial partner of 3Com slated to take a 16 percent stake in the new company. Huawei has been accused of accepting bribes related to mobile phone contracts in Iraq and engaging in industrial espionage, among other charges.
Because 3Com makes intrusion-prevention equipment for the Pentagon and other US government agencies, opponents of the deal feared sensitive information could be compromised.
Bain and 3Com have attempted numerous restructurings of the sale to please regulators, but were unable to agree upon an alternative deal.
In a statement regarding the termination fee, 3Com said that “it does not believe that Bain Capital Partners, LLC’s attempt to terminate its merger agreement….is valid”.