3Com files suit to collect fee in failed merger with Bain Capital affiliate

By Lisa Kerner

Charlotte, N.C., Aug. 1 - 3Com Corp. filed a lawsuit in the Delaware Chancery Court against Diamond II Holdings, Inc., an entity controlled by affiliates of Bain Capital Partners, LLC, alleging breach of contract.

It was reported in a form 8-K filed with the Securities and Exchange Commission that 3Com is seeking a $66 million termination fee under its September 2007 merger agreement with Bain Capital's affiliate.

The companies' agreement called for 3Com shareholders to receive $5.30 in cash per share in a deal to take the company private. Affiliates of Huawei Technologies Co. Ltd. were to acquire a minority interest in 3Com and become a commercial and strategic partner of 3Com, according to a prior 3Com news release.

In April, 3Com announced it terminated its agreement to be acquired by affiliates of the Boston investment firm for $2.2 billion.

As previously reported, 3Com stockholders voted in March to accept the merger, fulfilling its commitments under the agreement and preserving 3Com's right to pursue a break-up fee.

Bain Capital said on March 20 it was terminating the merger agreement because the U.S. Government's Committee on Foreign Investment in the United States planned to take action that would prohibit the transaction.

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

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