huawei logo.jpgHuawei Technologies could make a counter-offer to wrest control of H3C, its China-based networking equipment JV, from 3Com of the US.

Under the terms of the JV, which has now lapsed, either of the two parties can now buy out the other partner. Last week, 3Com offered to buy Huawei's 49% stake in H3C with a bid that values the venture at $2bn, according to the South China Post.

The Chinese equipment maker needs to respond with a counter-bid that must be at least 2% higher on a per-share basis and made within three days, according to this SEC filing.

That means Huawei will have to launch a counter-bid today (Monday) if it does not want to see H3C fall into US hands.

H3C was set up in 2003 as a JV to sell enterprise networking gear, mostly in the Chinese market. This hidden jewel now accounts for half of 3Com's sales, and if it was snapped up by Huawei, 3Com would probably have little choice but to go private or accept a trade sale.

3Com is thus keen to hang onto H3C but if a bidding war breaks out, we suspect that Huawei would win as it is now a much stronger company than 3Com.

A good sign of just how strong Huawei has become is the contract it signed last week with Versatel, Germany's third largest fixed network operator, which will install Huawei's optical networking kit in its backbone network. Huawei has grown rapidly to become the second largest supplier of optical network products in the world.

Once, Huawei's customers were mostly small operators in emerging markets, but it is now making inroads into established markets like Europe and North America, and winning over tier one carriers like Versatel as customers.


Technorati :
, , , ,

email