Tags:3Com

Shareholders of 3Com yesterday voted to approve being purchased by a company that is no longer interested.

The vote, held at the networking equipment maker¨s Campus Drive headquarters, will not salvage a $2.2 billion buyout proposed by Boston investment firm Bain Capital Partners LLP in September, but preserves 3Com¨s rights to pursue a $66 million termination fee after Bain walked away on Thursday.

During the 10-minute shareholder meeting, Edgar Masri, chief executive officer of 3Com, said the reasons Bain gave for terminating the agreement are not valid, and that 3Com will pursue a termination fee outlined under the merger agreement.

＾Our position is that the reasons cited by Bain Capital in their announcement are not grounds for termination of the agreement,￣ Mr. Masri said. ＾In short, we believe their view why the deal was terminated is invalid. We believe our merger agreement with Bain Capital is still in effect, and both parties continue to have obligations under that agreement to try to close the merger transaction contemplated by that agreement.

＾´ We intend to pursue the $66 million termination fee under the agreement, and conducting today¨s meeting and vote helps facilitate pursuing the termination fee.￣

Shareholders would have received $5.30 a share had the deal been closed. The U.S. Committee on Foreign Investment in the United States had said it would take action to block the deal, announced in September, which would have given a 16.5 percent minority stake to Huawei Technologies Co., China¨s biggest network equipment maker.

In a statement Thursday, Bain said that it had offered 3Com some alternatives to the deal, but could not come to an agreement. Bain spokesman Alex Stanton did not return telephone calls seeking comment.

Mr. Masri did not take questions during yesterday¨s meeting and was unavailable for comment afterward.

3Com spokesman John R. Vincenzo said that the company acknowledged that Bain offered some alternatives to the deal that was opposed by CFIUS, but said they were not in the best interests of 3Com.

＾The board of directors wants to make sure that any alterations to the merger transaction have to be in the best interests of the shareholders and 3Com,￣ he said. ＾They are going to have to go beyond what would satisfy CFIUS.￣

Of the more than 402 million shares of common stock outstanding, just under 70 percent voted in favor of the merger agreement, 3Com said.

3Com has not posted a profit since 2000. Its stock dropped 24 cents to $1.98 Thursday on the Nasdaq Stock Market. The markets were closed yesterday for Good Friday.



Source:telegram