Bowing to stiff resistance from U.S. regulators, Bain Capital has reversed course in its $2.2 billion bid to buy networking giant 3Com.
The move comes just a day before 3Com (NASDAQ: COMS) planned a shareholder vote on its proposed acquisition by Bain.
The deal also involved another firm, China-based Huawei Technologies, taking a minority stake in the company.
That aspect of the proposed acquisition -- through which Huawei, a longtime 3Com partner, would have received a 16 percent share of the company -- led to scrutiny by U.S. regulators on national security concerns.
Ultimately, worries about Chinese ownership of a 3Com stake resulted in the deal failing to receive the blessing of the U.S. Treasury Department's Committee on Foreign Investment in the United States (CFIUS), which would have been needed for the sale to proceed.
The committee's opposition led to considerable debate with the companies, during which 3Com and Bain said they took steps to address CFIUS's concerns.
"Bain Capital made several alternative proposals to 3Com that we believe could have satisfied the concerns raised by CFIUS," Bain Capital said in a statement. "We regret that we were unable to agree upon an alternative transaction."
Shares of 3Com plummeted on the news. At press time, the stock was trading at $1.99, down 10.36 percent.
Article courtesy of InternetNews.com