3Com wants a little more flexibility, and today it got its wish. The networking vendor announced today it will be acquired by private-equity firm Bain Capital in a deal valued at $2.2 billion.
The transaction is expected to close in the first quarter of 2008 following shareholder and regulatory approvals. The all-cash deal of $5.30 per share represents a 44 percent premium over the closing price of 3Com's stock on Sept. 27.
"From a business standpoint, going private gives us more flexibility to execute our business plan outside of the rigid demands of being a publicly traded company," said 3Com president and CEO Edgar Masri during a conference call this morning with investors.
"As a private company, we will be able to increase our focus on our long-term strategic objectives rather than the intensive quarterly focus required of publicly traded companies. Management can make crisp decisions without worrying about the short-term impact on the stock."
In addition to the Bain buyout, Masri said Asian networking giant Huawei Technology would be taking a minority interest in 3Com and would become a commercial and strategic partner.
Executives declined to discuss further details about Huawei's role during the conference call, adding only that 3Com would be filing a proxy with the SEC in the next few weeks with details on Huawei's involvement.
3Com and Huawei are no stranger to each other. In 2003 they launched the H3C venture as an effort to undercut networking giant Cisco.
3Com had been considering going private for over a year, and the 3Com board examined a number of options before unanimously deciding to recommend the Bain offer, Masri said.
Until the deal closes Masri assured it would be business as usual for 3Com's operations, including its security division Tipping Point, which was already in the process of being spun out from 3Com.
"Moving forward we're looking at having [Tipping Point] run as an autonomous entity," Masri said. "The new owners will have to determine how to do that."
3Com is the third-largest publicly traded technology company to announce a privatization deal this year. In May computer equipment reseller CDW announced it was going private for $7.3 billion. In June, telco vendor Avaya followed suit in its own private affair for $8.2 billion.