3Com Buying Out Huawei In China Joint Venture


3Com Tuesday said it plans to take full ownership of its China-based joint venture by buying out partner Huawei Technologies' minority stake.

The Marlborough, Mass.-based networking vendor plans to buy out Huawei's 49-percent stake in the Huawei-3Com (H3C) joint venture for $882 million, according to a 3Com statement. The deal, subject to approval by the People's Republic of China, represents an implied equity value of $1.8 billion, 3Com said.

Through H3C, formed in 2003, 3Com began selling Huawei networking products and later jointly developed products, including high-end routers and switches.

The joint venture's existing shareholder's agreement enabled either party to make a cash bid to buy the other's shares. 3Com began the bidding process on Nov. 15, and Huawei accepted a final bid on Nov. 27, 3Com said.

Edgar Masri, president and CEO of 3Com, said in a recent interview with CRN that 3Com's plans to increase its stake in the joint venture would benefit North American channel partners.

"With an increased ownership in the joint venture, we're going to have more coordinated activities and more influence on adding the feature set that is essential for the midrange," said Masri, who is also chairman of H-3C.

H3C has 4,800 employees, more than half of which are in research and development.