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[ISN] Bain quiet about probe into 3Com acquisition
By Grant Gross
January 02, 2008
IDG News Service
WASHINGTON -- Bain Capital LLC, a Boston-based equity investment firm,
declined to comment today on news reports that a federal government
panel reviewing a proposed acquisition of networking vendor 3Com Corp.
plans to extend its review.
Bain would get an 83.5% stake in 3Com, and Chinese networking giant
Huawei Technologies Co. would get the remaining piece in the $2.2
billion deal. The Committee on Foreign Investment in the United States
(CFIUS), part of the U.S. Department of Treasury, is investigating
whether the investment by Huawei poses a risk to national security after
Bain voluntarily submitted the deal for review in October.
Normally, a CFIUS review runs for 30 days, but the interagency committee
can take another 45 days. The Financial Times on Tuesday reported that
CFIUS this week would likely take the additional time.
A Bain spokesman declined to comment on the news report, saying the
CFIUS review was a "confidential process."
"Bain Capital is working closely with CFIUS to provide U.S. officials
with information about the proposed transaction," the company said in a
statement. "As stated previously, we believe CFIUS will conclude that
the company will remain firmly in the control of an American firm, has
only a small minority foreign shareholder, and that the deal presents no
risks to national security."
Some critics have disagreed. Rep. Thaddeus McCotter (R-Mich.) has called
on CFIUS to reject the deal. Huawei's stake in 3Com, which markets
intrusion-detection systems, would "gravely compromise" U.S. national
security, he said in a House floor speech in October.
The U.S. Department of Defense uses 3Com intrusion-detection products,
and Chinese hackers have targeted the agency, McCotter said. "Given this
and other instances of communist China's persistent cyberwarfare against
us, approving this sale would be an abject abdication of CIFUS' duty to
protect America's vital defense technologies from enemy acquisition," he
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