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Report: 3Com Selling to Private-Equity Firm, Huawei for $2B

Bain Capital Partners and Huawei Technologies are teaming to buy 3Com in a $2.2 billion deal set to close next quarter, according to a report.

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In a deal set to close in the first quarter, Bain will pay approximately $2.2 billion in cash for Marlborough, Mass.-based 3Com, according to the report. As part of the deal, Huawai will acquire a minority stake in 3Com, the report said.

3Com could not immediately be reached for comment.

The acquisition is the latest in a string of high-profile deals that are bringing private equity into the enterprise technology sector. Avaya is in the midst of going private via an $8.2 billion deal with Silver Lake Partners and TPG Capital. Online retailer CDW was acquired earlier this year by Madison Dearborn Partners for $7.3 billion.

Both Silver Lake and Bain have been courting 3Com, according to reports this summer. Rival Nortel Networks was also reportedly seeking a deal for 3Com.

For 3Com, the sale represents a reunion with former partner Huawei. 3Com in March paid $882 million to buy Huawei out of their Huawei-3Com joint venture. Now 3Com owns 100 percent of China-based H3C. Silver Lake, Bain Capital and TPG Capital bid against 3Com for Huawei's share of the joint venture.

The move comes as 3Com is preparing an aggressive push in the VoIP market.

3Com President and CEO Edgar Masri said last week that the company is poised to unveil its latest strategy for taking market share in low-end VoIP.

"We're planning a major push in VoIP around small businesses, and you will hear a lot more about it in coming weeks," Masri said last Thursday during a conference call to discuss the company's first-quarter financial results.

The effort will come as part of a broader quest to gain market share among small and mid-size customers across its product lines, Masri said.

For the quarter ended August 31, 3Com reported a loss of $18.7 million, or five cents per share, compared to a loss of $14.1 million, or 4 cents per share, for the same quarter a year ago.

Revenue for the quarter climbed to $319.4 million, up more than six percent from $300.1 million in the year-ago quarter.

3Com during the earnings call also said it would delay the planned IPO of its TippingPoint security division.

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