3Com’s Buyout Crashes In The Pacific Ocean (COMS)

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The acquisition of 3Com Corp. (NASDAQ: COMS) by Bain Capital and Huawei was already questionable, and then regulatory questions turned into trouble, and now trouble has turned into an outright dead deal.  An affiliate of Bain Capital has notified 3Com that it is officially ending its merger agreement because CFIUS was going to block the deal because of the involvement and stake that would have been held by Huawei in China.

Frankly, this is no shock here, even if the shares have fallen further on the news.  We just noticed this week when 3Com sent a "recommendation for approving the merger" to shareholders ahead of the shareholder vote that the company did make note of a right to pursue a merger break-up fee under certain circumstances.  Whether or not 3Com pursues any fees or damages is one thing.  Actually getting those is another matter on top of that.

3Com shares are down 13% at $1.91 today on almost 3-times normal volume.  That also marks another 52-week low under the prior $2.08.

Another one bites the dust.

Jon C. Ogg
March 20, 2008

3Com has been reviewed for our SPECIAL SITUATION newsletter and for our "10 Stocks Under $10" newsletter.  You can also join our open email distribution list.  Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.