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By | Christopher Williams 5th October 2007 11:07

Money men rubbish spooky fears over 3Com deal

National security concerns unfounded

Bain Capital Partners, the private equity shop that sounded the death knell for 3Com this week, has moved to kneecap talk of a national security block by the US.

Part of the takeover is being funded by Chinese firm Huawei, prompting collywobbles in Washington DC that Beijing might get its pinko mitts on some tasty networking vulnerabilities.

Congressman Thaddeus McCotter (R, MI, circa 1862), chair of the Republican Policy Committee, said the deal represents a "stealth assault on America's national security".

Bain's Hong Kong chief Jonathan Zhu hit back in the Financial Times today. He said: "This deal involves a US private equity firm buying a US-listed company. Huawei would be a minority investor with a 16.5 per cent stake.

"Huawei previously owned 51 per cent of H3C when it was a joint venture with 3Com, and there was no issue then."

Bain has agreed to submit the deal for national security review, and is bullish about its outcome.

Huawei is a private company run by reclusive ex-military man Ren Zhengfei, and is often accused of lacking transparency and PLA links. In 2003, Cisco accused it of intellectual property theft, adding to its controversial reputation. The case was dropped after 3Com got involved with Huawei.

As the FT notes, none of the issues circling Huawei seem to have stymied its rise. Its revenues this year are expected to hit $15bn, up from $11bn a year ago. ®

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