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July 27, 1987

GETTING NETWORKED UP: 3COM, BRIDGE COMMS AGREE TO MERGE

By CBR Staff Writer

3Com Corp, which itself came close to being acquired by Convergent Technologies 18 months ago, has agreed to acquire Silicon Valley neighbour Bridge Communications Inc for shares worth a startling $193m. The move represents a horizontal integration for Santa Clara-based 3Com, which specialises in local area network hardware, now including servers and diskless workstations, while Bridge, of Mountain View, is primarily a supplier of gateways that link local networks into wide area networks. The combination expects to have sales of about $200m this year, making it the largest networking equipment company in the US apart from the appropriate parts of AT&T and IBM. In their most recent quarters, 3Com did $3.2m net on sales up 63% at $31.6m in its fourth period to May 31, Bridge did $1.8m net on sales up $1.8m in the quarter to June 30. The agreement calls for 3Com to pay 1.4 of its shares for each of the 8.3m Bridge shares outstanding, valuing them at $23.275 apiece. Bridge closed up $1.875 to $23.50 on the announcement late Friday, while 3Com closed up just $0.625 at $16.625. Holders are due to vote on the proposals in October, and to frustrate any counter-bidders, each has granted the other options to buy up to 30% of the other to repel raiders.

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