Network solutions firm 3Com is suing private equity company Bain Capital Partners in a bid to win USD66m in deal termination fees, reports Reuters. This follows Bain’s decision to pull out of a joint takeover with Huawei of 3Com.
Bain agreed to join Chinese telco equipment manufacturer, Huawei, in buying 3Com in September 2007. The deal was expected to be completed by Q1 2008. However, security fears and opposition by the US’s Committee on Foreign Investment caused the negotiations to falter and revised terms could not be met.
3Com makes networking and data products for small businesses and also has contracts with the US government. Critics of the takeover – which included some 3Com shareholders – said that selling to Huawei, which has close ties with the Chinese government, could lead to compromised US national security.