Marlborough's 3Com Board Sets Shareholder Vote
By Donna Borak
AP Business Writer
The board of Marlborough-based 3Com Corp. scheduled a shareholder vote on a $2.2 billion buyout by a consortium that includes a Chinese company, signaling confidence the deal can clear antitrust and national security reviews.
In a filing with the U.S. Securities and Exchange Commission, the Marlborough, Mass.-based network equipment maker said shareholders are set to meet at 8 a.m. on Feb. 29 to vote on a proposed buyout by private equity firm Bain Capital Partners and China's Huawei Technologies.
Review Request
Some attorneys familiar with the national security review said the deal continues to face significant resistance at some federal agencies because of Huawei's role.
Boston-based Bain Capital has said it is working to close the deal before the first quarter ends March 31, even though it has yet to get the government's approval. The concern is whether sensitive military technology could be transferred to China via the minority stake held by Huawei, a Chinese telecommunications company.
In late September, Bain requested a national security review with the Committee on Foreign Investment in the United States, a 12-agency group with the authority to recommend the White House block or alter terms of deals that involve national security.
Acquirers often request national security reviews if they believe issues might arise as a show of good faith to the government that they want to address any concerns.
Intelligence agencies and some officials at the Defense Department don't trust Huawei, said attorneys close to the process who requested anonymity because of the sensitive nature of the review.
The mistrust stems from Huawei's ties to China's government, especially the military.
The company's founder is a former member of China's People's Liberation Army.
Shenzen-based Huawei would hold 16.5 percent of the new company's stock and have the power to appoint three of the 11 board members. Bain Capital, which was co-founded by former Massachusetts governor and presidential candidate Mitt Romney, would own 83.5 percent of the shares and appoint the other eight members.
Huawei would not hold management roles, a 3Com filing to the SEC said.
"The parties are working closely with CFIUS to provide U.S. officials with information about the transaction," 3Com said in its latest SEC filing.
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