3Com (COMS) shares are sharply lower Wednesday morning after the company announced that the application to the Committee on Foreign Investment in the United States for the proposed acquisition of 3Com by Bain Capital and Huawei has been withdrawn. While Bain was to lead the buyout, the involvement of China’s Huawei in the acquisition of the networking equipment company had raised national security issues.
3Com CEO Edgar Masri said in a statement that he was “very disappointed” that the company could not reach an agreement with CFIUS on terms for approval of the deal. He said 3Com will work with Bain and Huawei on revising the terms of the deal to address the committee’s concerns.
But obviously, the Street isn’t convinced this is possible. Wednesday morning, 3Com is down 63 cents, or 16.9%, at $3.10.