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November 10, 2009

HP to acquire 3Com for $2.7 billion

To expand its networking products portfolio and strengthen its position in China

By CBR Staff Writer

HP has entered into an agreement to acquire 3Com, a provider of enterprise networking products for $2.7 billion. The terms of the transaction have been approved by the HP and 3Com boards of directors.

According to the company, this combination will underscore its next-generation data center strategy built on the convergence of servers, storage, networking, management, facilities and services.

This move of HP into the networking domain has heated up its rivalry with Cisco, which forayed into the server market last year.

The acquisition of 3Com is expected to expand HP’s ethernet switching offerings, add routing products and strengthen the company’s position in China via the H3C offerings. In addition, the combination will add a research and development team in China for HP’s networking products.

HP said that 3Com brings network security capabilities to the company through its TippingPoint portfolio. The California-based tech company added that by combining its ProCurve offerings with 3Com’s set of products, it will enable customers to build a next-generation network infrastructure that supports their needs to link PCs to corporate networks. The product combination is expected to generates about $1 billion in annual sales.

Dave Donatelli, executive vice president and general manager of enterprise servers and networking at HP, said: “By acquiring 3Com, we are accelerating the execution of our converged infrastructure strategy and bringing disruptive change to the networking industry.

“By combining HP ProCurve offerings with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center.”

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The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of 3Com’s stockholders. The transaction is expected to close in the first half of calendar 2010.

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