Bain offers concessions in proposed 3Com buyout

PHILADELPHIA, Feb 12 (Reuters) - Buyout firm Bain Capital said on Tuesday its has made concessions to the U.S. government to gain national security approval for its planned $2.2 billion acquisition of network-equipment maker 3Com Corp (COMS.O).

Among the proposals under consideration, Bain has offered to divest 3Com's Tipping Point unit, which makes national security software, a source familiar with the situation said.

Bain declined to comment on the specific discussions with the Committee on Foreign Investment in the United States (CFIUS). The committee is an inter-agency U.S. governmental panel that reviews corporate acquisitions involving foreign buyers.

"We have put on the table robust mitigation proposals that offer significant structural and security safeguards to American national security interests," Bain said in a statement.

A decision by CFIUS is expected imminently, the source said. CFIUS held an initial 30-day review of the transaction, but in January expanded its scrutiny by 45 days and held a full investigation.

3Com agreed in September to be acquired by Bain for $2.2 billion in a deal that would also give China's Huawei Technologies Co Ltd [HWT.UL] a 16.5 percent minority stake.

Huawei can increase its stake in 3Com by up to an additional 5 percent, according to filings with the U.S. Securities and Exchanges Commission.

In October, eight U.S. lawmakers were backing a bill suggesting that the planned buyout 3Com "threatens the national security of the United States".

3Com previously said that Huawei would not have access to sensitive U.S. technology or U.S. government sales and that it would lack operational control or the ability to make decisions for the firm.

"At this sensitive time for the U.S. and global economies, we think it is critical that responsible cross-border investments like the 3Com transaction be permitted to move forward on sound economic terms, while fully protecting American national security," Bain said on Tuesday.

Last year, 3Com had planned to spinoff Tipping Point through an initial public offering, but that idea was scrapped when Bain agreed to buy Marlborough, Massachusetts-based 3Com.

Tipping Point makes "intrusion prevention" systems to protect networks at large businesses and government agencies. 3Com acquired Tipping Point in late 2004 for $430 million.

3Com's shareholders are scheduled to vote on Bain's buyout proposal on February 29. (Reporting by Jessica Hall; Editing by Jan Dahinten) (For more M&A news and our DealZone blog, go to here)