Telecom Equipment News
- Huawei joins Bain in 3Com buyout
Date: 8-Oct-2007 Sources: (Shenzhen Daily)
U. S. private equity firm Bain Capital Partners on Wednesday said it will submit for a national security review its proposed US$2.2 billion buyout of networking equipment maker 3Com Corp.
Government scrutiny was anticipated ever since the acquisition was announced Sept. 28 because of a minority stake in the deal held by Shenzhen-based telecommunications company Huawei Technologies.
Legal analysts say a key determinant of the government's view of the deal will be whether Huawei is a passive or active investor.
In a statement, Bain Capital, a Boston-based private equity firm, said 'we believe the U.S. Government review in this matter will conclude that the company will be firmly controlled by an American firm, have only a small minority foreign shareholders, and the deal presents no risks to national security.'
Bain Capital and Huawei, China's largest maker of equipment for telecommunications networks, hired five banks to arrange US$1.2 billion of loans for their proposed buyout of 3Com Corp., sources with direct knowledge of the deal said early this month.
Citigroup Inc., UBS AG, HSBC Holdings Plc, ABN Amro Holding NV and Bank of China (Hong Kong) Ltd. will arrange US$800 million of five-year leveraged loans, US$750 million of which will be for the takeover and US$50 million to boost working capital at Marlborough, Massachusetts-based 3Com, the sources said, declining to be identified because the information isn't public. Citigroup, UBS and HSBC will also underwrite an additional US$400 million of short-term loans, they said.
The unprofitable 3Com said Sept. 28 it agreed to a US$2.2 billion takeover by Bain and Huawei. The purchase is expected to be completed by the first quarter of 2008. Huawei will buy 16.5 percent of 3Com to become the U.S. company's second-largest shareholder, Huawei spokesman Ross Gan said Oct. 1.
Citigroup and UBS are advising Bain on the acquisition, and Goldman Sachs Group Inc. is advising 3Com.
3Com in March completed the acquisition of Huawei's 49 percent stake in H3C Technologies Co., a joint venture, for US$882 million. The company trumped efforts by Bain, Silver Lake Partners and Huawei, who planned to borrow about US$1 billion to buy 3Com's stake, bankers familiar with the situation said last November.
Separately, Huawei last week announced that it has been selected by China Mobile to install a new generation GSM base station on Mount Everest. The base station will provide mobile network coverage for the Beijing 2008 Olympic Torch Relay Team that plans to reach the summit in time for the Olympic Games.
The base station will be positioned at an altitude of 6,500 meters creating a mobile telecommunications network that will cover the base camp on Everest and the main route to the mountain's summit. In addition to benefiting the Beijing 2008 Olympic Torch Relay Team the base station is expected to benefit Natural Extreme Challenge Events, one of China Mobile's partners, and other mountaineers wishing to reach the summit of the world's highest mountain.
China Mobile selected Huawei's new generation GSM Base Station, because it is built on 3G and IP technologies, and is equipped with many advanced capabilities such as a solar power supply, satellite communications system and Ethernet fiber transmission.
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