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Bain, Chinese Firm Buy 3Com

US will check telecommunication buyout for security risks

By Asta Hostetter,  Newser User

Posted Sep 30, 2007 5:14 PM CDT

(Newser) – Chinese company Huawei Technologies Co. will help private equity firm Bain Capital buy 3Com Corp., a flailing US telecommunications company, by picking up almost 20% of the tab. Recently Chinese businesses have bought strategic stakes in US companies rather than full buyouts to skirt political scrutiny, which can lead to a deal collapse, reports the WS Journal.

Huawei is the largest telecommunications company in China, prompting a thorough vetting by Washington for security risks to American networks. Though shares in 3Com traded high in the 90’s, one expert said it's in "one of the industry's longest death spirals,"  due to bad purchases and effects of the post-boom Internet bust.

A worker assembles parts in the manufacturing center of Hua Wei Technologies Co. Ltd. in Shenzhen, China, March 28, 2005. Huawei Technologies is a private high-tech enterprise in China specializing in
A worker assembles parts in the manufacturing center of Hua Wei Technologies Co. Ltd. in Shenzhen, China, March 28, 2005. Huawei Technologies is a private high-tech enterprise in China specializing in   (KRT Photos)
An employee shows the 3G handset Huawei U626, which has the video conferencing function, in the exhibition hall of Hua Wei Technologies Co. Ltd. in Shenzhen, China, March 28 2005. Huawei Technologies
An employee shows the 3G handset Huawei U626, which has the video conferencing function, in the exhibition hall of Hua Wei Technologies Co. Ltd. in Shenzhen, China, March 28 2005. Huawei Technologies   (KRT Photos)
3Com Corp. offices are seen, Friday, Sept. 28, 2007 in Marlborough, Mass. 3Com Corp., a makes of networking hardware and software, will be sold to affiliates of private equity firm Bain Capital Partners LLC for $2.2 billion and taken private, 3Com said Friday. (AP Photo/Lisa Poole)
3Com Corp. offices are seen, Friday, Sept. 28, 2007 in Marlborough, Mass. 3Com Corp., a makes of networking hardware and software, will be sold to affiliates of private equity firm Bain Capital Partners...   (Associated Press)
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