Hewlett-Packard buys 3Com for $2.7 billion in a major challenge to Cisco


Computer giant Hewlett-Packard (HPQ) announced a $2.7 billion deal to buy 3Com (COMS), the huge networking company, late Wednesday. It's HP's fourth-largest acquisition ever and instantly makes the Silicon Valley pioneer the second-largest networking company in the world after Cisco Systems (CSCO). The deal, which represents a 44% premium on 3Com stock, sent 3Com shares soaring some 35% to $7.65, 25 cents short of HP's offer, in after-hours trading.

HP's move is a bold attack on Cisco, the networking Goliath. "Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor," Dave Donatelli, HP's executive vice president and general manager for enterprise servers and networking, said in a statement.