HP Gets EC Approval For 3Com Purchase

The European Commission has given its approval to Hewlett-Packard’s $2.7 billion bid to buying networking equipment maker 3Com.

In a statement released on 12 Feb, the European regulators said they had concluded their investigation of the proposed deal—focusing particularly on the router and switch market—and determined that there were no antitrust concerns.

“The Commission’s investigation confirmed that the merged company would continue to face a number of global and effective competitors, giving customers the choice from a range of alternative providers for switches and routers,” the EC said in a statement.

The regulators also said there were no concerns about antitrust issues in ancillary areas, such as IT services.

HP officials are looking to 3Com to help it build out its ProCurve networking business as it looks to increase its competition with Cisco Systems and to grow its capabilities in the increasingly competitive push for converged data centere solutions.

Before the deal was announced in November, industry research firm The Yankee Group estimated that Cisco owned about 52 percent of the $40 billion networking market, with HP at 11 percent and 3Com at 9 percent. With 3Com under its wing, HP is now a competitor with about 20 percent of the market.

HP officials expect to close the deal in the second quarter.

Adding 3Com to the mix will give HP greater offerings in the core networking space, will enable HP to add 3Com’s Tipping Point network security business and will give HP a larger presence in the all-important Chinese market.

Building out its networking capability also will give HP a stronger play in the converged data centre space, where rivals such as Cisco, IBM, Oracle and Dell all are looking for ways to give customers more tightly integrated solutions that combine server, storage, networking and management software.

HP is looking to make the bulk of its converged data centre solutions come from in-house, which makes the 3Com deal particularly important.

HP announced its bid for 3Com six months after 3Com re-entered the worldwide networking market. The company had exited the global enterprise space more than five years ago to focus on its SMB products, but announced at the Interop show in Las Vegas in May 2009 that it was getting back into the game on the strength of its H3C business in China.