HP agrees to buy 3Com for $2.7 billion
Hewlett-Packard Co
HP said it would pay $7.90 per share for 3Com, or a premium of 39 percent over its Wednesday closing price on Nasdaq.
The move comes amid a flurry of acquisitions by Cisco and other technology vendors trying to broaden their product portfolios and provide a one-stop shop for computing, networking and storage equipment.
It gives HP additional scale within the low-to-mid tier wireless and networking market. It matches up with HP's switches that compete with Cisco, said Shannon Cross at Cross Research.
3Com, which has a large presence in China, has been pushing into the large enterprise market outside that country with its H3C brand, trying to take on giants like Cisco.
The company has been an acquisition target before. In 2008, Bain Capital Partners and China's Huawei Technologies
Analysts said that by buying 3Com, HP will be competing head to head with Cisco in the networking equipment market. Cisco recently entered the server market, where HP is strong.
HP has started to find success competing in the communication space. It has been competing with Cisco. To that degree, this is also something in that category, said Lou Miscioscia, analyst at Brigantine Advisors.
The terms of the deal were approved by the HP and 3Com boards of directors, but needs shareholder approval. The deal is expected to close in the first half of 2010.
HP also reported preliminary quarterly profit and revenue that beat analysts' expectations, and raised its outlook for fiscal 2010.
3Com shares jumped 35 percent to $7.66 in after-hours trading. HP shares edged 0.4 percent lower to $49.80.
(Reporting by Sinead Carew, Ritsuko Ando and Gabriel Madway; Editing by Carol Bishopric, Bernard Orr)
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