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US probes Huawei-3Com deal
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A United States House committee is investigating the proposed US$2.2 billion acquisition of 3Com Corp by Bain Capital LLC and China's Huawei Technologies Co, a deal that has sparked national-security concerns in Washington.

The Energy and Commerce Committee requested information from the US Treasury Department on its investigation of the proposed transaction, Committee Chairman John Dingell, a Democrat from Michigan, said.

Putting 3Com's networking technology in Chinese hands may threaten national security because the Pentagon uses firewalls made by 3Com, committee members told Treasury Secretary Hank Paulson, according to Bloomberg News. Under the terms of the deal, Huawei, founded by former army officer Ren Zhengfei 20 years ago, will get a 16.5-percent stake in 3Com.

"There is growing apprehension in the Congress about the proposed acquisition," politicians wrote.

3Com, based in Marlborough, Massachusetts, fell eight cents, or 1.9 percent, to US$4.05 on Friday on the Nasdaq Stock Market. Bain and Huawei offered US$5.30 a share for 3Com in September.

Bain said it was working to assure law makers that the transaction is safe. The Boston-based investment company would own 83.5 percent of 3Com if the deal is approved.

(Shanghai Daily February 4, 2008)

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