On November 11, 2009 HP and 3Com Corporation today announced that they have entered into a definitive agreement under which HP will purchase 3Com, a provider of networking switching, routing, and security solutions, at a price of $7.90 per share in cash or an enterprise value of approximately $2.7 billion. The terms of the transaction have been approved by the HP and 3Com boards of directors. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of 3Com’s stockholders. The transaction is expected to close in the first half of calendar 2010.
Key components of the acquisition are as follows:
- The acquisition of 3Com will expand HP’s Ethernet switching offerings, add routing solutions and security
- Strengthen the company’s position in China – via the H3C offerings.
- In addition, the combination will add more than 2,300 research and development staff in China
Over the last 18 months HP has methodically brought together an overall company strategy that includes networking as a core competency. At Interop in Las Vegas in May 2009, HP let it be known it intended to compete aggressively in the $30+ billion enterprise networking market. The $2.7 billion 3Com acquisition is proof of that commitment. 3Com brings a full portfolio of products, potential to triple HP's market share, and entrée into China and Latin America. Most importantly for HP, 3Com's portfolio promises to dramatically change the cost structure of networking equipment. 3Com has refreshed its product line with the goal of reducing the total cost of ownership of networking equipment. 3Com's goals of price/performance coupled with operational simplicity in single pane of glass management fits well with HP's strategy to deliver a converged architecture. An added benefit is that Tipping Point will quickly fill a gap in HP's network security story.
Additionally, 3Com and HP are very synergistic in their go-to-market strategies. Both companies have a long history of engaging with the indirect channel and are each known to the market and within the channel as "channel friendly" suppliers. From a partnering perspective, IDC believes that this should be and can be an almost seamless and very smooth integration between the two communities and likens this to the HP acquisition of Lefthand from a partner perspective.
The acquisition is not without the usual challenges of any merger, particularly in the networking market. Since best practices in networking dictate standardization on a limited set of products across the network, customers faced with the choice of multiple portfolios from one installed supplier tend to evaluate all the options in the market, thus risking the current installed base. While any acquisition presents significant challenges in terms of product integration, customer retention, and staff alignment, IDC believes this is a net positive for HP because the IT market is entering into a new era where cloud architectures demand networking expertise and tightly integrated systems and architectures are required to solve large customers complex problems.
Key components of the acquisition are as follows:
- The acquisition of 3Com will expand HP’s Ethernet switching offerings, add routing solutions and security
- Strengthen the company’s position in China – via the H3C offerings.
- In addition, the combination will add more than 2,300 research and development staff in China
Over the last 18 months HP has methodically brought together an overall company strategy that includes networking as a core competency. At Interop in Las Vegas in May 2009, HP let it be known it intended to compete aggressively in the $30+ billion enterprise networking market. The $2.7 billion 3Com acquisition is proof of that commitment. 3Com brings a full portfolio of products, potential to triple HP's market share, and entrée into China and Latin America. Most importantly for HP, 3Com's portfolio promises to dramatically change the cost structure of networking equipment. 3Com has refreshed its product line with the goal of reducing the total cost of ownership of networking equipment. 3Com's goals of price/performance coupled with operational simplicity in single pane of glass management fits well with HP's strategy to deliver a converged architecture. An added benefit is that Tipping Point will quickly fill a gap in HP's network security story.
Additionally, 3Com and HP are very synergistic in their go-to-market strategies. Both companies have a long history of engaging with the indirect channel and are each known to the market and within the channel as "channel friendly" suppliers. From a partnering perspective, IDC believes that this should be and can be an almost seamless and very smooth integration between the two communities and likens this to the HP acquisition of Lefthand from a partner perspective.
The acquisition is not without the usual challenges of any merger, particularly in the networking market. Since best practices in networking dictate standardization on a limited set of products across the network, customers faced with the choice of multiple portfolios from one installed supplier tend to evaluate all the options in the market, thus risking the current installed base. While any acquisition presents significant challenges in terms of product integration, customer retention, and staff alignment, IDC believes this is a net positive for HP because the IT market is entering into a new era where cloud architectures demand networking expertise and tightly integrated systems and architectures are required to solve large customers complex problems.
