Mergers and Acquisitions on Ulitzer

HP is going to buy 3Com, which has been for sale forever, for $2.7 billion in cash, making it HP’s fourth-largest acquisition ever and giving Cisco a comeuppance for treading on HP’s server toes.

HP says that the acquisition will make it number two in networking behind Cisco, which dominates the space. It will also give HP what Cisco wants – edge-to-data center solutions.

It remains to be seen how IBM responds to a shuffled deck.

HP will be paying $7.90 a share and the transaction is expected to close in the first half. HP anticipates it will be slightly dilutive to its fiscal 2010 non-GAAP earnings.

HP suggests that $1.3 billion-a-year 3Com, which has an enviable market leadership position in China and a customer list that includes some of the world’s largest banks, manufacturers, ISPs, public utilities and retailers, has been hampered by its lack of global reach, something HP can supply, claiming that customers will now have choice as well as simplicity.

In a canned statement Dave Donatelli, the ex-EMC exec now running HP’s Enterprise Servers and Networking business, said, “By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry. By combining HP ProCurve offerings with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center.”

3Com claims to offer better performance, require less power and eliminate administrative complexity compared to Cisco.

Besides 3 Com’s successful H3C foray into China, where it has a large R&D team, HP says the acquisition will expand its Ethernet switching offerings and add routing solutions. It’ll also get best-of-breed network security capabilities with 3Com’s TippingPoint portfolio.

Roughly 30% of the Fortune 1000 has deployed TippingPoint intrusion prevention systems.

HP CIO Randy Mott (pictured above) said HP is going to eat its own dog food. “We are confident,” he said, “that we can run our entire global business of 300,000-plus employees, including our next-generation data centers, entirely on the new HP networking solutions. Based on our experience and extensive testing of 3Com’s products, we are planning to undertake a global rollout within HP as soon as possible after the completion of the acquisition.”