Insider Points To EC Approval Of HP 3Com

Jeffrey Burt,

An unnamed source close to the Hewlett-Packard acquisition of 3Com tells Reuters that European regulators will OK the deal by the 12 Feb. deadline

Hewlett-Packard should have no trouble getting approval from European regulators for its $2.7 billion (£1.73bn) acquisition of networking equipment maker 3Com, according to a published report.

Quoting an unnamed source close to the negotiations, a Reuters report on 10 Feb. said the European Commission has no major competitive concerns about the deal.

“It should go through smoothly,” the source told Reuters. “There are no grounds for offering conditions. It should be an unconditional clearance.”

The EC, which is the antitrust arm for the European Union, reportedly has until 12 Feb. to approve, reject or decide to further investigate the deal.

HP announced in November its intention to buy 3Com, a move that will greatly expand HP’s networking offerings and make it a formidable competitor to Cisco Systems.

It also gives HP a stronger position in its competition with Cisco, IBM, Dell and now Oracle—with Sun Microsystems in the fold—in the converged data centre space. The top-tier vendors are pushing data centre solutions that more tightly integrate servers, networking, storage and managed software.

Analysts have said 3Com will help HP in several ways, including giving the vendor a strong portfolio of core networking products as well as 3Com’s Tipping Point network security subsidiary. The deal also will give HP greater traction in the burgeoning Chinese market.

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

Approval from the EC would be an important hurdle for HP to clear. European investigators have taken tough antitrust stands with U.S. tech companies in the past, most recently keeping Oracle’s $7.4 billion (£4.72bn) acquisition of Sun on hold for several months while investigating concerns regarding the MySQL database technology. They eventually approved the deal.

In addition, the EC in 2009 levied a $1.45 billion fine against Intel for what investigators said was anti-competitive behavior in its rivalry with Advanced Micro Devices. Intel is appealing the fine.