HP To Buy 3Com In Multibillion-Dollar Deal

The battle to control the virtualized data center of the future heated up on Thursday, as Hewlett-Packard (NYSE: HPQ) announced a deal to purchase 3Com (NSDQ: COMS) for $2.7 billion.

3Com will bring a wide-ranging portfolio of network switching, routing, and security solutions to HP. The technology will boost HP's already potent networking offerings, which are centered in HP Procurve.

"By acquiring 3Com, we are accelerating the execution of our converged infrastructure strategy and bringing disruptive change to the networking industry," HP executive VP Dave Donatelli said in a statement.

HP's converged infrastructure architecture, announced Nov. 4, essentially creates a one-stop data-center shop. It packages HP's compute, storage, and networking offerings into a highly virtualized bundle which can be centrally managed.

That move came shortly after Cisco (NSDQ: CSCO) linked up with EMC (NYSE: EMC) and VMware in a partnership which tightly integrates storage alongside easy-to-manage virtualized data-center bundles called V-Blocks.

The 3Com acquisition broadens the networking technology HP can fold into its data-center offerings. "Our extensive product line and innovative technology together with HP's breadth and scale will expand our global opportunity," said 3Com CEO Bob Mao.

In announcing the deal, HP added that "the acquisition of 3Com will dramatically expand HP's Ethernet switching offerings, add routing solutions, and significantly strengthen the company's position in China."

The deal is constituted as a stock buy, with HP offering $7.90 per share in cash for 3Com's stock, for a total value of approximately $2.7 billion. The terms of the transaction have already been approved by both HP's and 3Com's boards of directors. The acquisition is expected to close in the first half of calendar year 2010.