Huawei to sell stake in joint venture to 3Com
By Li Weitao (China Daily)Updated: 2006-11-30 08:42 China's top telecoms equipment maker Huawei Technologies has agreed to sell off its 49 per cent stake in a joint venture with US-based 3Com for US$882 million, in a move to offload its non-core businesses.
The deal, which requires Chinese Government approval, could give 3Com full ownership of H3C. The Hong Kong-headquartered venture mainly operates in Hangzhou, the capital of East China's Zhejiang Province.
The agreement is in line with analysts' expectations. Following an agreement between the two sides, 3Com, which makes communications network equipment and software, launched a bid to buy Huawei's stake in H3C on November 15.
Huawei then made a counteroffer to buy 3Com's stake in H3C, but analysts said this was designed to force 3Com to increase its buyout price.
H3C was established in 2003 with Huawei taking 51 per cent and 3Com holding the remaining stake. In October 2005, 3Com bought an additional 2 per cent stake from Huawei for US$28 million, increasing its holding to 51 per cent.
On that basis, a 49 per cent stake could be worth US$686 million.
Proceedings from the sale of its stake in H3C could help Huawei finance its core businesses, especially mobile telecoms.
"The divestment will further enable Huawei to focus on its core business, strengthening our leadership of the fixed and mobile convergence solutions market," said Huawei Senior Vice-President Guo Ping.
"H3C has become increasingly irrelevant to Huawei's core business," said
Stanley Gu, an analyst with Beijing-based eShip Consulting.
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