Nortel Has 3Com In Its Sites

Apparently, there’s speculation that Nortel (NT) may be interested in acquiring 3Com (COMS). Interesting.

If Nortel is interested in 3Com, it will likely have to compete against private equity investors who may see 3Com as relatively inexpensive and fixable (see Blogging Buyouts for more on this idea).

The question is whether Nortel wants or needs 3Com and whether it’s willing to cough up $1.8 billion (3Com’s current market capitalization).

Does Nortel need 3Com to jump start its enterprise growth strategy? After all, 3Com does sell a portfolio that includes networking hardware and software, including switches, routers, gateways, Internet telephony systems, security systems and wireless networking equipment for enterprises. As well, 3Com has a services and systems integration unit - a business that Nortel likes these days.

With the reported bid for Avaya (AV), Nortel is clearly willing to make an acquisition to get a bigger foothold in the enterprise market. The question is whether 3Com is the right vehicle to do it or whether there’s other, more attractive targets out there.

Of course, all this speculation is probably the work of investment bankers who now know Nortel’s a potential buyer.