Bain brings Chinese partner to $2.2bn 3Com deal

Computer network company 3Com will be taken private by Bain Capital in partnership with Chinese networking group Huawei.

Bain Capital Partners is set to expand its tech portfolio with the acquisition of 3Com, a US company that makes networking hardware and software, for $2.2 billion (€1.6 billion).

Chinese networking company Huawei Technologies will also acquire a minority interest, the value of which was not disclosed, and become 3Com’s “commercial and strategic partner”, according to a statement.

Jonathan Zhu

“3Com has a strong competitive position, and we believe there are significant opportunities to grow by acquiring customers and introducing new products,” Jonathan Zhu, a Hong Kong-based managing director at Bain Capital, said in a statement.

Under terms of the agreement, the US buyout firm will pay 3Com shareholders $5.30 per share, which is a 44 percent premium over the company’s closing share price on 27 September.

Bain has obtained financing commitments from Citibank NA Hong Kong, Branch Citigroup Global Markets Asia, UBS AG Singapore Bank, The Hong Kong and Shanghai Banking Corporation, ABN AMRO Bank NV and Bank of China (Hong Kong).

Expected to close in the first quarter of 2008, the transaction is subject to shareholder and regulatory approvals.

Goldman Sachs is the financial advisor to 3Com and its board, while Wilson Sonsini Goodrich & Rosati provided legal counsel. Citigroup Global Markets  UBS Securities are financial advisors to Bain, while Ropes & Gray provided legal counsel.

Bain currently has numerous technology companies in its portfolio, including investments in SunGard Data Systems, NXP, Sensata Technologies, FCI, Sun Telephone, Applied Systems and MEI Conlux. 

The private equity firm has more than $50 billion under management and has offices in Boston, Hong Kong, Shanghai, Tokyo, New York, London and Munich.