HP to buy 3Com

HP has announced it will acquire 3Com in a $US2.7 billion, all cash deal. Updated with Anne Livermore video.

Hewlett Packard (HP) has announced it will buy 3Com for around $US2.7 billion.

HP issued a press release today stating that the two companies have "entered into a definitive agreement under which HP will purchase 3Com" and that "The terms of the transaction have been approved by the HP and 3Com boards of directors."

“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,” said Dave Donatelli, HP's Executive Vice President and General Manager, Enterprise Servers and Networking said "

The press release goes on to say that HP expects to " dramatically expand HP’s Ethernet switching offerings, add routing solutions and significantly strengthen the company’s position in China – one of the world’s fastest-growing markets – via the H3C offerings. In addition, the combination will add a large and talented research and development team in China that will drive the acceleration of innovations to HP’s networking solutions."

The transaction comes after 3Com, a leader in enteprise networks in the 1990s, recently tried to re-enter these markets. The company has also recently tried to enter the market for storage area networks, with limited success.

Initial reaction to the sale is muted.

Enterprise Strategy Group analyst Steve Duplessie questioned whether acquiring 3Com can help HP compete with Cisco, tweeting "Not sure why yet - but doesn't mean they bought H3C which would have been COOL!" before following up with "Why not buy Brocade in that case? Much cheaper and more of a poke in Cisco's eyeball."

Another Twitterer, Andrew Blanda, declared the $US2.7 billion bid "$2.6 billion too much."

UPDATE

CNBC has just posted the video below. At about 3:00, Anne Livermore, HP's Executive Vice President, HP Enterprise Business, discusses the deal.

By Simon Sharwood

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