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3Com welcomes buy-out

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3Com has welcomed this week's news that it is to be bought out by private equity firm Bain Capital and is looking forward to a new flexibility and the ability to pursue long-term strategic goals. 


Bain will buy out shareholders in a $2,2-billion deal which will also include a minority shareholding by Chinese networking manufacturer Hauwei. The transaction is subject to the usual shareholder and regulatory approval, but should be finalised by the first quarter of 2008.
Gavin Zackey, 3Com regional sales director: Africa and South Africa, says the Bain buy-out should be seen as a vote of confidence in 3Com, which has recorded three quarters of growth and profitability.
"Going private will give us greater flexibility to achieve our business plans," he says. "3Com will be able to focus on long-term strategic objectives rather than on short-term financial reporting."
Interestingly, although 3Com has a long history of co-operating with Hauwei, the Chinese company's shareholding comes from its own relationship with Bain.
Zackey explains that 100% of 3Com will be purchased by Bain, which has a seperate relationship with Hauwei that will give it a minority shareholding.
"We are seeing the combination of shareholding by a financial giant, together with a technology giant as a great combination," he says. "In particular, a strategic partnership with Hauwei will add significant value to our business and help to drive the planned growth."
Management at 3Com is viewing both the buy-out and relationship with Hauwei as positive moves that will augur well for customers and the company itself.
"We believe it allows us to become a truly global partner with the capability of becoming a global leader in the networking environment," says Zackey.
Good news for customers is that there should be no disruption in either their relationship with 3Com, their shipping and delivery schedules, or the products they have access to.
"Until the transaction is finalised, it will be business as usual. And we expect the transaction to be seamless as far as our customers are concerned. This is by no means a hostile takeover and we don't expect there to be any negative changes."
3Com customers will still have access to the current line-up of networking and security solutions, Zackey adds, with no disruptions anticipated.
"The most significant part of this transaction is that it adds value to the business and will help to drive continuous growth going forward."