3Com deal put up for fed review

WASHINGTON – Bain Capital Partners on Wednesday said it will submit for a national security review its proposed $2.2 billion buyout of networking equipment maker 3Com Corp.

Government scrutiny was anticipated ever since the acquisition was announced Sept. 28 because of a minority stake in the deal held by Chinese telecommunications company Huawei Technologies, which has close ties to China’s government.

Companies usually submit deals to the federal Committee on Foreign Investment in the United States as a defensive measure. The government can unwind deals that weren’t reviewed if federal agencies later determine they pose a threat to national security.

“The government has the ability to stop a deal,” said Craig King, an attorney at Arent Fox LLP. “So companies voluntarily submit to get assurances that the deal won’t be stopped or unwound later.”

CFIUS, a 12-member group of key economic officials at the White House and several Cabinet-level officials, has been much more active following the Sept. 11 terrorist attacks in investigating potential national security issues surrounding proposed deals involving foreign buyers.

Legal analysts say the government’s review of the deal will center on whether Huawei will have shareholder voting rights, seats on the board or access to technology.

In a statement, Bain Capital said, “We believe the U.S. government review in this matter will conclude that the company will be firmly controlled by an American firm, have only a small minority foreign shareholders, and the deal presents no risks to national security.”