Litigation Grudge Match: Bain Capital Versus 3Com

Earlier this past week, Bloomberg reported on the messy litigation in Delaware Chancery Court between 3Com and its former suitor, Bain Capital LLC.

3Com wants a disputed $66 million breakup fee that it says Bain is obligated to pay. For its part, Bain argues that 3Com waived its right to the fee.

This all goes back to the the Bain acquisition bid for 3Com stretching back more than a year ago.

A minority partner in that acquisition bid was Huawei Technologies, a Chinese networking-equipment heavyweight with close ties to that country’s government. US government officials eventually forced the dealmakers to back away from the table, citing concerns about China’s potential access to intrusion-prevention and -detection technologies resident in TippingPoint, a 3Com-owned security company.

Anyway, the law is one thing and ethics are something else entirely. Bain probably didn’t think the US government would discourage the deal from going through, and one could argue that Bain should not be held liable for the government intercession.

That said, I find it difficult to believe that 3Com would have waived the breakup fee. When it became apparent that the deal would go down in flames, 3Com’s board and executives must have recognized that the breakup fee would be the only thing they could salvage for disaffected shareholders.


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