HP to buy 3Com for $2.7 billion
Hewlett-Packard Co. announced Wednesday it will purchase networking company 3Com for $2.7 billion, and also preannounced higher fiscal fourth-quarter earnings and raised its outlook for fiscal 2010.
The deal is worth $7.90 per share of 3Com, which is 39% higher than the stock’s closing price of $5.69 on Wednesday. Shares of 3Com (COMS) soared 35% to $7.65 after hours on the announcement.
“By combining HP … with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center,” said Dave Donatelli, HP’s vice president of networking, in a statement.
3Com took in $1.3 billion in revenue last year on its networking and securities solutions
HP (HPQ, Fortune 500) said it made the acquisition to expand its networking solutions offerings and to “significantly strengthen the company’s position in China.” The company said 3Com has been very successful in rapidly gaining market share in China, scooping up 30% of the network switching market.
On a conference call with analysts, Donatelli said 3Com had “best-in-class products,” which will be married with HP’s mammoth distribution and sales arm. When the sale is completed, “the networking world will be completely transformed,” he boasted.
source:money.cnn
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