3Com is buying US Robotics in the biggest merger in the history of the networking industry.
3Com is expected to pay $6.6 billion (#4.4 billion) in stock for the US modem maker. The combined company will have annual revenues of $5 billion and will operate under the 3Com name.
The deal, which is due to be completed in the next few months, aims to offer users a one-stop shop for LAN and WAN solutions, from adaptor cards to high-speed modems. It takes 3Com into new areas. The company's strengths are in the corporate networking hardware market, while US Robotics' core focus is on the consumer sector. US Robotics is also the dominant supplier of remote access devices to ISPs.
"It's a good thing for both companies," commented Val Sribar, vice president of analyst firm the Meta Group. "3Com can now dominate the consumers and small business market."
He added the deal "only marginally improves" the company's competitive position against its biggest rival, Cisco.
Eric Benhamou, chairman and CEO of 3Com, made it clear who will be setting the agenda. "We are not going to be 4Com or 3Robotics. We are going to be 3Com. There will be no political fights and no stalemates on the board."
Despite it being the biggest merger ever in the history of networking, 3Com's takeover of US Robotics is unlikely to change life for end-users.
The two companies are deeply complementary. 3Com has been wanting to get into the business of selling modems to ISPs, and now it has the chance.
US Robotics, meanwhile, has been coming under increased competitive pressure in the remote access market and has needed a big brother to help it out.
The deal shouldn't unduly worry 3Com's biggest rival Cisco, despite media speculation, because it has never really competed against US Robotics.
What is less clear, though, is how the merger will affect US Robotics' battle with Rockwell and Motorola over 56kbps modem standards.
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