Hewlett-Packard has agreed to acquire networking solutions provider 3Com Corporation for $2. 7 billion, a deal that would significantly strengthen its position in China.
HP, the world's largest technology company, would purchase the Massachusetts-based 3Com at a price of $7.90 per share in cash or an enterprise value of around $2.7 billion, the company said in a statement today.
The deal would be closed in the first half of 2010, subject to approval of the 3Com shareholders. Both the boards have already cleared the acquisition.
The $1.3-billion 3Com is a leading provider of networking, switching, routing and security solutions across the world and has three brands— H3C, 3Com, and TippingPoint-- all offering high-performance networking and security solutions to both small and large enterprises.
While H3C offers enterprise networking solutions and is the market leader in China, TippingPoint offers intrusion prevention systems and network access control solutions.
"Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor," HP Executive Vice President and Enterprise Servers and Networking General Manager Dave Donatelli said in a statement announcing the deal here today.
HP Executive Vice-President and Chief Information Officer Randy Mott said, "Based on our experience of extensive testing of 3Com products, we are planning to undertake a global rollout within HP as soon as possible after the completion of the acquisition."
Commenting on the acquisition, 3Com Chief Executive Officer Bob Mao said, "Our extensive product line and innovative technology together with HP's breadth and scale will expand our global opportunity.
"This deal would accelerate the execution of our converged infrastructure strategy and bring about disruptive changes to the networking industry," Donatelli added.
The terms of the transaction have been approved by the HP and 3Com boards. Under the terms of the merger agreement, 3Com shareholders would receive $7.90 for each 3Com common stock.
The acquisition of 3Com would dramatically expand HP's Ethernet switching offerings, add routing solutions and significantly strengthen its position in China, the statement added.
The combination would also add a large R&D team into HP's Chinese centre.
It can be noted that 3Com has been a major contributor to the development of enterprise networking solutions since the invention of Ethernet in the 1970s by 3Com founder.
