Network equipment maker 3Com Corporation (Nasdaq: COMS) jumped 32 percent in trading Thursday, after Hewlett-Packard Company (NYSE: HPQ) announced Wednesday it has agreed to purchase the company for $2.7 billion in cash. The announcement boosted shares to a 52-week high of $7.52, topping the list of Biggest Percentage Price Gainers among common stocks
The 3Com transaction, approved by the companies' boards, is expected to be completed during the first half of 2010. The deal values 3Com’s stock at $7.90 per share, which represents a 39% premium over 3Com shares' Wednesday closing price of $5.69. Bob Mao, CEO of 3Com, said in a statement Wednesday, “Our extensive product line and innovative technology together with HP’s breadth and scale will expand our global opportunity.” Hewlett-Packard’s acquisition of 3Com was taken as a call to battle against Cisco Systems (Nasdaq: CSCO). Although HP is growing business in computer networking, the 3Com acquisition doesn't even put it close to Cisco in market share. Palo Alto, Calif.-based Hewlett-Packard expects 3Com will help expand its offerings of products such as Ethernet switches and network routers, as well as increase its position in the Chinese market. 3Com also sells enterprise technology products such as Voice over IP gateways, wireless LAN access equipment, video surveillance, network management software, and security solutions. The company is headquartered in Hong Kong and has a strong foothold in China, with more than 30% of enterprise networking market. Mao continued, “3Com’s networking products are based on a modern architecture which has been designed to offer better performance, require less power and eliminate administrative complexity when compared against current network offerings. Our products are enterprise proven and widely deployed in the world’s largest banks, manufacturers, Internet service providers, public utilities and retailers.” 3Com Corporation is a $1.3 billion global enterprise networking solutions provider that sets a new price-performance standard for customers. 3Com has three global brands – H3C, 3Com and TippingPoint – that offer high-performance networking and security solutions to enterprises large and small. The H3C enterprise networking portfolio – a market leader in China – includes products that span from the data center to the edge of the network, while TippingPoint network-based intrusion prevention systems and network access control solutions deliver in-depth, no-compromise application, infrastructure and performance protection.