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HP to acquire 3Com for $2.7bn

Combined company to challenge Cisco

HP has announced plans to acquire 3Com for $2.7 billion, 30 years after Ethernet creator Robert Metcalfe co-founded the company. The acquisition will fill out HP's data centre product portfolio with switches, routers and security products, plus expand its presence in China.

Under the cash transaction, HP will pay $7.90 per 3Com share. The terms of the transaction have been approved by the HP and 3Com boards of directors.

The companies hope their combined entity will give Cisco a run-for-the-money in data centre networking and convergence.

"Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor," said Dave Donatelli, HP’s executive vice president and general manager, Enterprise Servers and Networking. "By combining HP ProCurve offerings 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 centre."

3Com recently re-entered the North America large enterprise switching stage after years of focusing on China. The company boasts a wide array of switching platforms – from workgroup, to wiring closet edge to deep data centre core – after acquiring the whole of a joint venture it had with Huawei called H3C.

HP, meanwhile, has been lacking a core data centre switch for some time. Its data centre-optimised switching lineup consists of a top-of-rack 24-port 10Gbps Ethernet switch called the ProCurve 6600.

Indeed, HP says it will run its global business and next-generation data centers entirely on the new networking platforms obtained from 3Com, as well as its own, soon after completion of the acquisition.

In addition to significantly broadening its own networking portfolio, the acquisition of 3Com will strengthen HP’s position in China, one of the world’s fastest-growing markets. It will also add a research and development team in China.

3Com also brings to HP network security capabilities through its TippingPoint product line. Approximately 30% of the Fortune 1000 companies have already deployed TippingPoint intrusion prevention systems, the companies say.

The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of 3Com’s stockholders. The transaction is expected to close in the first half of calendar 2010.

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