DEFA14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
September 28, 2007

3COM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation)
  0-12867
(Commission
File Number) 94-2605794
(IRS Employer
Identification No.)

350 Campus Drive
Marlborough, Massachusetts
01752
(Address of Principal Executive Offices)
(Zip Code)

 

Registrant’s telephone number, including area code: (508) 323-1000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

      o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      þ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS

Ex-4.1 Amend. No.1 to the Third A/R Preferred Shares Rights Agreement

Ex-99.1 Press Release dated September 28, 2007

ITEM 1.01 Entry into a Material Definitive Agreement.

Agreement and Plan of Merger

     On September 28, 2007, 3Com Corporation, a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Diamond II Holdings, Inc., a corporation organized under the laws of the Cayman Islands, (“Newco”), and Diamond II Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Newco (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will be merged with and into the Company, and as a result the Company will continue as the surviving corporation and a wholly owned subsidiary of Newco (the “Merger”). Newco is controlled by Bain Capital Fund IX, L.P. (“Bain Capital Fund”) and Shenzhen Huawei Investment & Holding Co. Ltd. (collectively, the “Participants”).

     Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of common stock of the Company (the “Common Stock”), other than shares owned by the Company, Newco or Merger Sub, or by any stockholders who are entitled to and who properly exercise appraisal rights under Delaware law, will be canceled and will be automatically converted into the right to receive $5.30 in cash, without interest. Vesting of all outstanding 3Com equity based awards will continue until the closing of the Merger, in accordance with their respective terms. At the closing of the Merger, outstanding shares of restricted stock and restricted stock unit awards will be purchased for $5.30 per share less applicable withholdings. Immediately prior to the closing of the Merger, outstanding options will become fully vested and exercisable. To the extent unexercised as of the closing of the Merger, options with an exercise price below $5.30 per share will be cashed out at the difference between $5.30 and the exercise price of the option, less applicable withholdings. All other options will terminate as of the closing of the Merger without consideration as the applicable exercise price equals or exceeds $5.30, which is the per share merger consideration.

     The Merger Agreement contains a non-solicitation or “no shop” provision restricting the Company from soliciting alternative acquisition proposals from third parties and from providing information to and engaging in discussions with third parties regarding alternative acquisition proposals. The no-shop provision is subject to a customary “fiduciary-out” provision, which allows the Company under certain circumstances to provide information to and participate in discussions with third parties with respect to bona fide written unsolicited alternative acquisition proposals and under certain circumstances, coupled with the payment of a termination fee of $66,000,000, to terminate the Merger Agreement.

     The Merger Agreement contains certain termination rights for both the Company and Newco. The Merger Agreement provides that, upon termination under specified circumstances, the Company would be required to pay Newco a termination fee of $66,000,000. In addition, if the stockholders of the Company fail to approve the proposed transaction and the Merger Agreement is terminated by the Company or Newco, the Company has agreed to reimburse Newco for any out of pocket transaction fees and expenses incurred by Newco or Merger Sub, up to a maximum of amount of $10,000,000. The Merger Agreement further provides that, upon its termination under specified circumstances, Newco would be required to pay the Company a termination fee of either $66,000,000 or $110,000,000, as applicable.

     Newco has obtained equity and debt financing commitments for the transactions contemplated by the Merger Agreement. The aggregate proceeds of the commitments, together with the available cash of the Company, will be sufficient for Newco to pay the aggregate merger consideration and all related fees and expenses. Consummation of the Merger is subject to customary conditions to closing, including the approval of the Company’s stockholders and receipt of requisite antitrust and other regulatory approvals.

     The Board of Directors of the Company (the “Board of Directors”) unanimously approved the Merger Agreement. Goldman Sachs & Co. served as the financial advisor to the Board of Directors.

     The foregoing description of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which will be filed as an exhibit to a future periodic or current report.

     On September 28, 2007, the Company issued a press release announcing that it had entered into the Merger Agreement. A copy of the press release is attached hereto as Exhibit 99.1.

     In 2003, 3Com and Shenzhen Huawei Investment & Holding Co. Ltd. (“Huawei”), a participant in the Merger, formed a joint venture partnership in China named Huawei-3Com Co., Limited (“H3C”), with 3Com as a minority shareholder holding a 49% interest in H3C. 3Com, Huawei and H3C entered into various commercial agreements in connection with the joint venture. In 2005, 3Com became the controlling shareholder of H3C with 51% ownership interest and on March 29, 2007, 3Com purchased Huawei’s remaining 49% interest in H3C and became H3C’s sole shareholder. H3C changed its name to H3C Technologies Co., Limited. In connection with that transaction, Huawei, as a former shareholder of H3C, agreed to a specified previously disclosed non-compete provision. Huawei continues to be a significant customer of 3Com and H3C.

Item 3.03 Material Modification to Rights of Security Holders.

     On September 28, 2007, the Company and the American Stock Transfer & Trust Company, a New York state trust company (the “Rights Agent”) entered into Amendment No. 1 (the “Amendment”) to the Third Amended and Restated Preferred Shares Rights Agreement between the Company and the Rights Agent as amended and restated as of November 4, 2002 (the “Rights Agreement”). The Amendment permits the execution of the Merger Agreement and the performance and consummation of the transactions contemplated by the Merger Agreement, including the Merger, without triggering the provisions of the Rights Agreement.

     The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, which is included as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

The following exhibits are filed herewith:

Exhibit
Number	Description
4.1	Amendment No. 1 to the Third Amended and Restated Preferred Shares Rights Agreement between 3Com Corporation and American Stock Transfer & Trust Company, dated September 28, 2007
99.1	Press Release dated September 28, 2007

Additional Information and Where You Can Find It

     In connection with the transaction, 3Com will file a proxy statement with the SEC. The proxy statement will be mailed to the stockholders of 3Com. Investors and security holders of 3Com are urged to read the proxy statement when it becomes available because it will contain important information about 3Com and the proposed transaction. The proxy statement (when it becomes available), and any other documents filed by 3Com with the SEC, may be obtained free of charge at the SEC’s web site at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC by 3Com by contacting 3Com Investor Relations at investor_relations@3Com.com or via telephone at (508) 323-1198. Investors and security holders are urged to read the proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction.

     3Com and its respective directors and executive officers may be deemed to be participants in the solicitation of proxies from its stockholders in favor of the proposed transaction. Information about the directors and executive officers of 3Com and their respective interests in the proposed transaction will be available in the proxy statement.

SIGNATURE
 

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	3COM CORPORATION
Date:  September 28, 2007	By:	/s/ Neal D. Goldman
		Neal D. Goldman
		Executive Vice President, Chief Administrative and Legal Officer and Secretary

 

EXHIBIT INDEX

Exhibit
Number	Description
4.1	Amendment No. 1 to the Third Amended and Restated Preferred Shares Rights Agreement between 3Com Corporation and American Stock Transfer & Trust Company, dated September 28, 2007
99.1	Press Release dated September 28, 2007

EX-4.1

3COM CORPORATION

AMENDMENT NO. 1 TO

THIRD AMENDED AND RESTATED

PREFERRED SHARES RIGHTS AGREEMENT

     This Amendment No. 1 (this “Amendment"), dated as of September 28, 2007, is made by and between 3Com Corporation., a Delaware corporation (the “Company”), and American Stock Transfer & Trust Company, a New York state trust company(the “Rights Agent”) to amend the Third Amended and Restated Preferred Shares Rights Agreement, dated as of November 4, 2002, by and between the Company and the Rights Agent (the “Rights Agreement”). Capitalized terms used in this Amendment but not defined herein shall have the meaning assigned to them in the Rights Agreement.

Recitals

     Whereas, Section 27 of the Rights Agreement provides that, in certain circumstances, the Company may supplement or amend the Rights Agreement without the approval of any holders of Rights;

     Whereas, the Company desires to modify the terms of the Rights Agreement in certain respects as set forth herein, and in connection therewith, is entering into this Amendment and directing the Rights Agent to enter into this Amendment.

     Now, Therefore, in consideration of the foregoing premises and the mutual covenants and conditions set forth below, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties to this Amendment hereby agree as follows:

Amendment

1. Amendment of the Rights Agreement.

     1.1 Section 1 of the Rights Agreement is hereby amended by adding the following new sentence to the definition of “Acquiring Person”:

“Notwithstanding the foregoing, neither Diamond II Holdings, Inc. nor any of its Affiliates or Associates shall be deemed to be an Acquiring Person and neither a Shares Acquisition Date nor a Distribution Date shall be deemed to occur and the Rights will not separate from the Common Shares, in each case, solely by reason of the execution, delivery, performance or consummation of the transactions contemplated pursuant to the Agreement and Plan of Merger, dated as of September 28, 2007, by and among the Company, Diamond II Holdings, Inc., and Diamond II Acquisition Corp. (including any amendment or supplement thereto, the “Merger Agreement”).”

2. No Other Amendment. Except as modified by this Amendment, the Rights Agreement shall remain in full force and effect without any modification. By executing this Amendment below, the Company certifies that this Amendment has been executed and delivered in compliance with the terms of Section 27 of the Rights Agreement and is consistent with the terms thereof. This Amendment shall be deemed an amendment to the Rights Agreement and shall become effective when executed and delivered by the Company and the Rights Agent as provided under Section 27 of the Rights Agreement. Each of Diamond II Holdings, Inc. and Diamond II Acquisition Corp. shall be an express third party beneficiary hereof.

3. Effect of Amendment. This Amendment shall be deemed to be in force and effect immediately prior to the execution of the Merger Agreement; provided, however, that this Amendment shall automatically terminate (if at all) and be of no further force or effect on the date on which the Merger Agreement is terminated in accordance with its terms. Except as and to the extent expressly modified by this Amendment, the Rights Agreement and the exhibits thereto, shall remain in full force and effect in all respects. In the event of a conflict or inconsistency between this Amendment and the Rights Agreement and the exhibits thereto, the provisions of this Amendment shall govern.

4. Force Majeure. Notwithstanding anything to the contrary contained herein, the Rights Agent shall not be liable for any delays or failures in performance resulting from acts beyond its reasonable control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or retrieval systems, labor difficulties, war, or civil unrest.

5. Counterparts. This Amendment may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

6. Miscellaneous. This Amendment shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such state applicable to contracts to be made and performed entirely within such state. If any term or other provision of the Amendment is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Amendment shall nonetheless remain in full force and effect and upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, this Amendment and such term or other provision shall be deemed to have been amended so as to effect the original intent of the parties as closely as possible in an acceptable manner to the board of directors of the Company.

[Remainder of Page Left Blank Intentionally]

     The parties hereto have caused this Amendment to be executed and delivered as of the day and year first written above.

American Stock Transfer & Trust Company		3Com Corporation
By:	/s/ Isaac J. Kagan	By:	/s/Neal D. Goldman
Name: Isaac J. Kagan		Name: Neal D. Goldman
Title: Vice President		Title: Executive Vice President,
		Chief Administrative and Legal
		Officer and Secretary

[SIGNATURE PAGE TO AMENDMENT TO RIGHTS AGREEMENT]

EX-99.1

Ex-99.1

FOR IMMEDIATE RELEASE

For more information contact:

Media & Investor Relations	For Bain Capital:
John Vincenzo	Alex Stanton, Stanton Crenshaw Communications
508.323.1260	212.780.0701
john_vincenzo@3com.com	alex@stantoncrenshaw.com

3COM ANNOUNCES AGREEMENT TO BE ACQUIRED
BY BAIN CAPITAL PARTNERS FOR $5.30 PER SHARE IN CASH

Transaction valued at $2.2 billion

     MARLBOROUGH, MA — September 28, 2007 — 3Com Corporation (NASDAQ: COMS) today announced that it has signed a definitive merger agreement to be acquired by affiliates of Bain Capital Partners, LLC, a leading global private investment firm, for approximately $2.2 billion in cash.

     Under the terms of the agreement, shareholders will receive $5.30 in cash for each share of 3Com common stock they hold. This represents a premium of approximately 44 percent over 3Com’s closing price of $3.68 on September 27, 2007.

     The Board of Directors of 3Com has unanimously approved the merger agreement and has resolved to recommend that 3Com’s shareholders adopt the agreement.

     “The 3Com Board of Directors and senior management team have thoroughly reviewed our strategic alternatives and have determined that the agreement with Bain Capital provides the best value for 3Com shareholders,” said Edgar Masri, 3Com president

and chief executive officer. “We believe that this agreement better positions 3Com to establish itself as a global networking leader, which will benefit our employees, our customers and our partners.”

     “As business becomes ever more global, companies need to enhance their technology infrastructure to compete more effectively in the broader economy,” said Jonathan Zhu, a Bain Capital Managing Director, based in Hong Kong. “3Com has a strong competitive position, and we believe there are significant opportunities to grow by acquiring customers and introducing new products. We look forward to working with the management team and the company’s strategic partners to seize the worldwide growth opportunity that exists for 3Com’s communications networking solutions.”

     As part of the transaction, affiliates of Huawei Technologies will acquire a minority interest in the company and become a commercial and strategic partner of 3Com.

     The transaction is expected to be completed by the first quarter of calendar year 2008, subject to receipt of 3Com shareholder approval, customary regulatory approvals and other customary closing conditions. Citigroup Global Markets Asia Limited, UBS AG, The Hongkong and Shanghai Banking Corporation Limited, ABN AMRO Bank N.V. and Bank of China (Hong Kong) Limited have provided firm financing commitments to Bain Capital Partners.

     Goldman, Sachs & Co. is serving as exclusive financial advisor to 3Com and its Board of Directors, and provided a fairness opinion to the company in connection with the transaction. Wilson Sonsini Goodrich & Rosati acted as legal advisor to 3Com in connection with the transaction.

     Citigroup Global Markets, Inc. and UBS Securities LLC are serving as financial advisors to Bain Capital. Ropes & Gray acted as legal advisor to Bain Capital in connection with the transaction.

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     Management will host a conference call and Webcast at 10:00 a.m. EDT, September 28, 2007, to discuss the transaction. To participate on the call, U.S. and international parties may dial 913-312-0963. Alternatively, interested parties may listen to the live broadcast of the call over the Internet at 3Com’s Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section. For those unable to participate on the live call, a 24-hour replay will be available starting at Noon EDT on September 28 by dialing 719-457-0820, passcode: 2412682.

About 3Com Corporation

3Com Corporation (NASDAQ: COMS) is a leading provider of secure, converged voice and data networking solutions for enterprises of all sizes. 3Com offers a broad line of innovative products backed by world class sales, service and support, which excel at delivering business value for its customers. 3Com also includes H3C Technologies Co., Limited (H3C), a China-based provider of network infrastructure products. H3C brings high-performance and cost-effective product development and manufacturing and a strong footprint in one of the world’s most dynamic markets. Through its TippingPoint division, 3Com is a leading provider of network-based intrusion prevention systems that deliver in-depth application protection, infrastructure protection, and performance protection. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox.

About Bain Capital

Bain Capital, LLC (www.baincapital.com) is a global private investment firm that manages several pools of capital including private equity, venture capital, public equity and leveraged debt assets with more than $50 billion in assets under management. Since its inception in 1984, Bain Capital has made private equity investments and add-on acquisitions in over 250 companies in a variety of industries around the world, and has a team of almost 200 professionals dedicated to investing in and supporting its portfolio companies. Bain Capital has a long history of investing in technology businesses, including current investments in SunGard Data Systems, NXP, Sensata Technologies, FCI, Sun Telephone, Applied Systems and MEI Conlux. Headquartered in Boston, Bain Capital has offices in Hong Kong, Shanghai, Tokyo, New York, London and Munich.

Additional Information About the Transaction and Where to Find It

In connection with the proposed merger, 3Com will file a proxy statement with the Securities and Exchange Commission. Investors and security holders are advised to read the proxy statement when it becomes available because it will contain important information about 3Com and the proposed transaction. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by 3Com at the Securities and Exchange Commission’s Web site at http://www.sec.gov. The proxy statement and such other documents may also be obtained for free from 3Com by directing such request to 3Com Corporation 350 Campus Drive, Marlborough, MA 01752-3064 Attention: Investor Relations; Telephone: 508-323-1198. Investors and security holders are urged to read the proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed transaction.

3Com and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its shareholders in connection with the proposed merger. Information concerning the interests of 3Com’s participants in the solicitation is set forth in 3Com’s proxy statements and Annual Reports on Form 10-K, previously filed with the Securities and Exchange Commission, and in the proxy statement relating to the merger when it becomes available.

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Safe Harbor

This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our proposed acquisition by Bain, and our business objectives. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, without limitation, risks relating to: our ability to close the Bain transaction and to execute on our business plan and other risks detailed in the Company’s filings with the SEC, including those discussed in the Company’s annual report filed with the SEC on Form 10-K for the year ended June 1, 2007.

3Com Corporation does not intend, and disclaims any obligation, to update any forward-looking information contained in this release or with respect to the announcements described herein.

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Copyright ^© 2007 3Com Corporation. 3Com, the 3Com logo and TippingPoint are registered trademarks of 3Com Corporation. All other company and product names may be trademarks of their respective holders.

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