3Com shareholders to vote Friday on Bain Capital merger; foreign investment issues remain unresolved

By Lisa Kerner

Charlotte, N.C., March 19 - 3Com Corp. said it will convene its special meeting of shareholders on Friday as planned in order to fulfill its commitments under the merger agreement with affiliates of Bain Capital Partners, LLC.

The sole purpose of the meeting is to vote on 3Com's existing merger agreement with the Bain Capital affiliates.

Holding the meeting and the vote also preserves 3Com's right to pursue a break-up fee under certain circumstances.

Under the agreement, 3Com shareholders would receive $5.30 in cash per share and 3Com would become a private company, wholly owned by affiliates of Bain Capital. Affiliates of Huawei Technologies Co. Ltd. would also acquire a minority interest in 3Com and become a commercial and strategic partner of 3Com, according to a 3Com news release.

3Com and affiliates of Bain Capital and Huawei Technologies withdrew their joint voluntary filing with the Committee on Foreign Investment in the United States after failing to reach a mitigation agreement with the committee.

The parties have not been able to agree on an alternative transaction that addresses the committee's concerns and is acceptable to 3Com's board of directors.

"While we remain committed to exploring alternatives that would enable us to complete the merger transaction contemplated by our existing merger agreement, we also remain confident in our long-term prospects," 3Com president and chief executive officer Edgar Masri said in the release.

"The company and our strategy, which attracted Bain Capital to 3Com in the first place, have not changed," Masri added.

On March 6, 3Com announced it would reconvene and immediately adjourn its March 7 shareholders meeting without taking a vote on the pending merger.

3Com previously announced it would convene and adjourn its Feb. 29 meeting, rescheduling that meeting for March 7.

It was previously reported that the meetings were adjourned to give Bain Capital and 3Com time to address the concerns raised by committee.

In September, 3Com agreed to be acquired by affiliates of Bain Capital for $5.30 cash per share, or $2.2 billion.

Bain, a Boston investment firm, received financing commitments from Citigroup Global Markets Asia Ltd., UBS AG, the Hongkong and Shanghai Banking Corp. Ltd., ABN Amro Bank NV and Bank of China (Hong Kong) Ltd.

3Com, located in Marlborough, Mass., provides secure, converged voice and data networking solutions.

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