November 1, 2005 11:08 AM PST

3Com to take control of Huawei joint venture

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3Com plans to take a controlling stake in its joint venture with Chinese equipment maker Huawei Technologies.

Last week, 3Com signed an agreement to purchase another 2 percent of the joint venture for $28 million, according to a document filed with the U.S. Securities and Exchange Commission.

The purchase of the shares is subject to regulatory approval by the Chinese government. If the purchase is approved, 3Com will own a majority interest in the joint venture, called Huawei-3Com Technology, or H-3C. 3Com currently owns 49 percent of Huawei-3Com.

3Com and Huawei formed the joint venture in 2003. 3Com put up $160 million in cash, and Huawei supplied the technology and engineers to build Ethernet switches and Internet Protocol routers designed for the enterprise market. Huawei's own networking equipment business has focused on the carrier market.

Under the terms of the original deal, 3Com has had the right to sell Huawei IP switches and routers under the 3Com brand name everywhere in the world except China and Japan, where the products are sold under the Huawei-3Com name.

3Com's move to take control of the joint venture is part of the original agreement between the two companies. 3Com announced earlier this year that it planned to take a majority stake in the company.

 

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