3Com says Chinese stake poses no national security risk
Posted: 13 October 2007 0341 hrs

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NEW YORK: A deal giving Chinese-based Huawei Technologies a stake in US telecom equipment maker 3Com Corporation presents "no risk to national security," the US firm says in a regulatory filing.

The comments made by 3Com were made in a filing to the Securities and Exchange Commission on details of the 2.2 billion-US-dollar agreed takeover by private equity group Bain Capital Partners, LLC.

The deal announced September 28 calls for Huawei to hold a 21.5 per cent stake in 3Com but the Chinese firm "will have no operational control over 3Com and no ability to make decisions for it," the filing made late Thursday said.

Bain Capital agreed last week to voluntarily submit the deal to review by the Committee on Foreign Investment in the United States (CFIUS), an interagency panel that reviews the national security implications of foreign takeovers, the document noted.

Nonetheless, 3Com stated that Huawei "will not have any access to sensitive US-origin technology or US government sales as a result of this transaction."

The company said it maintains strict controls to prevent unauthorised transfers of sensitive technology.

3Com said it "conducts regular training and auditing to ensure security" and that Bain Capital "is committed to maintaining these strong compliance and security programs."

As a result, the company said the US government should conclude "that the company remains firmly in the control of an American firm, has only a small minority foreign shareholder, and that the transaction presents no risk to national security."

Under the deal, shareholders will receive 5.30 US dollars per share in cash. The board of directors of 3Com have unanimously approved the deal. - AFP/ac