The Channel logo

News

By | Austin Modine 10th October 2007 23:26

3Com sues 3Com over 3Com buyout

Cheapskateboard?

The $2.2bn sale of networking gear vendor 3Com has already hit litigious waters, courtesy its own shareholders.

In a filing with the Securities and Exchange Commission, 3Com disclosed that several class action lawsuits have been filed since September to block the sale to private equity firm Bain capital Partners and Huawei Technologies (pronounced Hua-h...hwwo — ah, skip it).

The shareholders contend the $2.2bn buyout price is "insufficient," that directors "breached their fiduciary duties" by agreeing to the figure, and Bain Capital and Huawei aided and abetted the alleged breaches.

3Com's proposed buyout was announced late last month, and offers shareholders a 44 per cent premium on the company's $3.68 share price before the news hit.

Such lawsuits are not altogether uncommon for corporate buyouts, used as a tool to grab more cash out of the deal — although the historical success of the tactic is somewhat questionable.

3Com was unavailable for comment as of this publication, but promises to "vigorously defend these suits" in its SEC filing.

Stockholders aside, the deal already has some in Washington feeling uneasy. Because part of the takeover is funded by the Chinese firm Huawai, Congressman Thaddeus McCotter said the deal represents "a stealth assault on America's national security." Last week, Bain Capital said it will submit to a national security review to quell any suspicions.

The deal, if it goes through, should close in Q1 next year.

Then — BAM — the Chinese take over the moon. Then who's being overly cautious? ®

comment icon Read 10 comments on this article alert Send corrections

Opinion

Walking on water, image via Shutterstock

Chris Mellor

IDC stats reveal who's who in the backup appliance bearpit
Carry on Cleo

Gavin Clarke

Infamy, infamy, Amazon and Microsoft have all got it in for me!

Tim Anderson

Also signals stronger cross-platform tools, access to new markets

Features

Shouting match
Single market vs. rest of the world
hacker
Mostly it's financial crime. Here's what all the cool kids' terms mean in English
Apple logo. Pic: Blake Patterson
Plenty of bumps in the 40-year road for Mac makers
single pain of glass