3Com has agreed to be acquired by associates of Bain Capital and Huawei in a deal worth US$2.2 billion (NZ$2.89 billion)
Huawei affiliate Shenzhen Huawei will take an unspecified minority stake in the company, and will be a commercial and strategic partner of the company.
3Com and Huawei are former joint venture partners. In 2003 they set up Huawei-3Com, an enterprise networking equipment company with headquarters in Hong Kong and factories in China. Last November, 3Com ended the alliance by paying US$882 million for Huawei's 49% stake in the venture, now called H3C Technologies.
As part of that sale, Huawei agreed not to compete with 3Com in certain markets, and remains one of the company's largest customers: around 30% of H3C's business comes from Huawei, according to company officials.
It's not the first time this year that investment funds have taken a major networking company private: earlier in the year, Avaya was bought by Silver Lake Partners and the Texas Pacific Group for US$8.2 billion.
Reports that 3Com was for sale have been circulating since earlier this year. In July, Nortel Networks was rumoured to have shown an interest.
The US$2.2 billion price tag represents a 44% premium over Thursday's closing 3Com share price. Bain hopes to close the deal by the first quarter of next year, subject to shareholder and regulatory approval.
3Com reported financial results for the quarter to August 31 last week. Sales for the quarter totaled US$319 million, up 6% on a year earlier, but the company's net loss widened, to US$18.7 million from US$14.1 million a year earlier.