HP Buys 3Com in $2.7 Billion Networking Play

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The Battle for the Data Center continues to realign the planets in the enterprise IT universe. HP said today that it will acquire network equipment vendor 3Com Corp. (COMS) for $2.7 billion. The deal works out to $7.90 a share for 3Com, a hefty premium to its closing price of $5.69.

The deal is the latest ripple from the ambitions of networking giant Cisco Systems (CSCO), which has launched a line of blade servers, upping the stakes in the converged networking space. As Cisco pushes into the server space, HP has moved to beef up its ProCurve line of networking gear and both HP and IBM have tightened their relationship with Cisco rival Brocade (BRCD).

“Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor,” said Dave Donatelli, executive vice president and general manager, Enterprise Servers and Networking, HP. “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.”

HP said the acquisition of 3Com will “dramatically expand” HP’s Ethernet switching offerings and significantly strengthen the company’s position in China. The deal also brings 3Com’s TippingPoint network security products into the HP fold. Approximately 30 percent of the Fortune 1000 companies have already deployed TippingPoint intrusion prevention systems, the companies said.

“We are confident that we can run our entire global business of 300,000-plus employees, including our next-generation data centers, entirely on the new HP networking solutions,” said Randy Mott, executive vice president and chief information officer, HP. “Based on our experience and extensive testing of 3Com’s products, we are planning to undertake a global rollout within HP as soon as possible after the completion of the acquisition.”

UPDATE: While the deal took many pundits by surprise, unusual trading activity in 3Com is highlighted at PEHub, Zero Hedge and Business Insider.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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  1. Sad day really, 3Com damn near invented the whole industry, but lost the plot trying to compete. Perhaps it's better this way, at least whats left of the expertise won't be buried