3Com shareholders seek to block $2.2B buyout by Bain Capital and China's Huawei Technologies
The Associated Press
Published: October 10, 2007
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WASHINGTON: 3Com Corp. shareholders have filed a class-action lawsuit to prevent a $2.2 billion (€1.56 billion) buyout by private equity firm Bain Capital Partners and China's Huawei Technologies, the company disclosed Wednesday.
In a filing with the Securities and Exchange Commission, the network equipment maker disclosed "several purported class-action lawsuits have been filed since Sept. 28 by 3Com shareholders" against the company, its directors, a former director, Bain Capital and in a few cases Huawei Technologies.
The plaintiffs are seeking class-action status for their suit and an injunction to stop the proposed sale of the company, Boston-based 3Com said in its SEC filing. Shareholders say the sale price agreed by 3Com is "insufficient ... (and) directors may have breached their fiduciary duties."
The shareholders also argue in their lawsuits that Bain Capital, where Republican presidential candidate Mitt Romney was once a partner, and in some cases Huawei Technologies, may have "aided and abetted the alleged breaches," according to the filing.
Last week, Bain Capital said it would submit to a national security review of the deal over concerns about the minority stake of Huawei, which has close ties to the Chinese government.
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On Sept. 28, Bain Capital and Shenzen-based Huawei, a privately held company, agreed to purchase 3Com for $2.2 billion (€1.56 billion) in cash. Shareholders would receive $5.30 in cash for each share of 3Com stock.
Shares of 3Com fell less than a penny to $4.85 in afternoon trading.
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