Networking giant 3Com will buy modem giant US Robotics for about US$6.6 billion, creating a behemoth whose reach will extend to all parts of the network. The agreement was reached Wednesday and announced after the financial markets closed.
The acquisition, should it close this summer as planned, would be the biggest ever in the history of the data networking industry and the most prominent in a string of purchases by 3Com. And, analysts said, it will give 3Com power in networking areas where it has been at a disadvantage.
By merging with US Robotics, 3Com will immediately strengthen its position in the remote access market, said Noel Lindsay, analyst at Deutsche Morgan Grenfeld. The combined company, to retain the 3Com name, will bring together the leaders of the networking and modem industries, to provide end-to-end LAN/WAN networking.
"US Robotics brings their modems to the deal and 3Com is strong on the adapter card," said 3Com founder Bob Metcalfe, who left the company in 1990 and is now a columnist at InfoWorld. He said he wasn't expecting the merger, but wasn't surprised by it. "I see this as part of a one-stop-shopping strategy" for network purchasers, he added.
3Com Chairman Eric A. Benhamou will remain chairman and chief executive officer, while US Robotics Chairman Casey Cowell will become vice chairman of the combined company. Following the merger, 3Com will have some $5 billion in annual revenues with more than 12,000 employees in 130 countries.
The terms of the agreement call for 1.75 shares of 3Com stock to be exchanged for every share of US Robotics stock. Based on the closing price of 3Com stock on Tuesday, the deal has been valued at $6.6 billion.
