3Com Stumped by CIFIUS (COMS)

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3Com Corp. (NASDAQ: COMS) has announced this morning that the company along with affiliates of Bain Capital Partners, LLC and Huawei Technologies have withdrawn their joint filing to CIFIUS, the Committee on Foreign Investment in the United States, regarding its proposed merger transaction.

While the company said it was disappointed that it was unable to reach a mitigation agreement with CIFIUS for securing merger approval, the parties remain committed to continuing discussions.  3Com’s board of directors approved the merger back on September 28, 2007.  It looks like 3Com is going to have to go back to basics and focus on its own business plan for the time being. 

Bain had already offered up a unit of the company to secure approval in a move that might have ultimately lowered the price shareholders were set to receive, and the new range would have been $4.50 to $5.00 rather than the original $5.30 per share buyout terms.

After that disclosure yesterday, 3Com shares fell from over $4.00 down to under $3.80.  Last Thursday shares were as high as $4.20 and shares were almost up at $5.00 when the merger was announced.  Shares are halted in pre-market trading.

UPDATE: at 9:08 AM EST, 3COM shares are trading down 15% at $3.15, which will be a new 52-week low.  Its 52-week trading range is $3.22 to $5.11.


Jon C. Ogg
February 20, 2008