Network equipment maker 3Com is giving up its independence in a $2.2 billion buyout by Bain Capital Partners, but it's gaining freedom from the whims of the market and a chance to expand in China, an Associated Press report said.
The report said the cash deal announced also gives Huawei Technologies, China's largest manufacturer of telecommunications equipment, a minority stake in the technology pioneer, something that could improve its prospects in Asia and raise eyebrows in Washington.
3Com, which faces brutal competition from Cisco Systems and others, is now a shadow of the high-flying star it became in the late 1990s technology boom. At one point in 2000, its shares briefly rose above $100 apiece, the report said.
Bain Capital, a private equity firm, decided the 28-year-old company still has enough potential to justify a buyout carrying a hefty 44% premium to the stock's closing price of $3.68 per share, the report added.
Shareholders will receive $5.30 in cash for each share of 3Com stock.
3Com expects to build off an earlier joint venture with Huawei to form new commercial and strategic alliances with the Chinese company, and expand in Asian markets where networking players like Cisco have a far bigger presence, the report further said.