Fairness sought for Huawei 3Com bid

THE Chinese Government said a troubled bid by Shenzhen-based Huawei for a U.S. high-tech company is a commercial deal and appealed to Washington to treat it fairly.

Huawei Technologies Co., the country's top telecom equipment maker, and its American partner Bain Capital Partner on Wednesday withdrew a request for U.S. Government approval of their US$2.2 billion bid for 3Com Corp. They said they failed to satisfy national security concerns.

"We hope the relevant U.S. authorities can deal with the case in accordance with law so as to create a fair and favorable environment for Chinese enterprises in the United States," Foreign Ministry spokesman Liu Jianchao said.

3Com said the companies would try to produce a new proposal that would satisfy U.S. regulators.

Huawei Saturday made its first public comment since U.S. national security concerns scuppered the deal, saying that its US$2.2 billion bid to buy 3Com Corp. with Bain Capital Partner failed due to acquisition complexities and rising costs.

"Due to the complexity of the acquisition process, the increase in acquisition costs and the significant change in stock market conditions since last year, Bain Capital and Huawei have announced their intention to withdraw their application relating to the proposed acquisition,"Huawei said in the statement Saturday.

The statement only alluded to the U.S. political concerns that are widely cited as reasons for the deal?£¼s failure.

Bain agreed in September to buy 3Com in a deal that would also give Huawei a 16.5 percent minority stake. Huawei could increase its stake in 3Com by up to an additional 5 percent.

Under Bain's proposal, China's top telecom equipment maker would not have had operational control of 3Com or access to sensitive U.S. technology. 3Com previously said Huawei would lack operational control or the ability to make decisions for the firm.

But several U.S. lawmakers complained the deal threatened national security due to Huawei's alleged ties to the Chinese military.

"It's not a huge blow (to Huawei). It was a small acquisition but it's symbolic as it has shown signs of U.S. protectionism,"Duncan Clark, chairman of research house BDA said Saturday.

"The U.S. may regret doing this,"Clark added. "Right now, the United States is still feeling the pain of the sub-prime issue-they should look to attract investment, not to deter them. And 3Com may have difficulties finding new investors."

The same U.S. national security concerns could erase an already short list of foreign suitors for Motorola Inc's handset business. Analysts have said Motorola could attract an offer from China's Huawei or ZTE Corp. (SD-Agencies)