3Com shareholders overwhelmingly approved a merger offer on Friday that had
been cancelled the day before.
The vote appeared to be designed to ensure 3Com could get a US$66 million breakup
fee as compensation for pursuing a merger with Bain Capital Partners and Huawei
Technologies that was proposed last year. The $2.2 billion deal would have taken
3Com private and put 16.5 percent of the company's shares in the hands of Huawei,
a large networking vendor partly owned by the Chinese government.
The deal was put
on hold last month because of concerns expressed by the Committee on Foreign
Investment in the U.S. (CFIUS) after the partners voluntarily submitted it to
the agency. 3Com, based in Marlborough, Massachusetts, is a relatively small
player in networking equipment but makes some intrusion-detection products.
U.S. Representative Thaddeus McCotter, a Republican from Michigan, has said
the U.S. Department of Defense uses that security gear and having 3Com partly
owned by a company linked to the Chinese government could endanger national
security.
After the negative finding by CFIUS, the parties said they were trying to modify
the deal so it could be approved. But on Thursday, Bain said it had given up
because CFIUS planned to act to stop the deal.
3Com said Thursday that Bain's termination was invalid because the reasons
Bain cited weren't grounds to end the deal. At the same time, 3Com said it would
fulfill its obligations under the deal while pursuing the breakup fee. To get
it, 3Com shareholders would have to approve the merger, the company said.
The shareholders approved the defunct merger by a vote of about 281.5 million
to 7.5 million shares, with 4.2 million shares abstaining, according to a U.S.
Securities and Exchange Commission filing.
