3Com and H-P Closer to Merger, China Review Looms (COMS, HPQ)

3Com Corporation (NASDAQ: COMS) filed with the SEC documents showing that the special meeting of holders approved the merger with Hewlett-Packard Co. (NYSE: HPQ).  While this does not make the deal a done-done deal, it is probably as close to being a done deal as you would expect.  The votes came largely in favor of the deal and the votes for adjournment, if necessary, also went in favor of the resolution.  The only issue noted today remains China.

There were 396,006,355 shares eligible to vote as of the December 9, 2009 record date and a quorum was present.  The merger proposal was approved by holders of record with 77.21% of the outstanding shares voting for the merger agreement at the said terms.  The second proposal was also approved with 70.82% voting for adjournment if necessary.

Both parties are required to give a filing to the Ministry of Commerce under the Anti-Monopoly Law, which both did in December and that was formally accepted on December 28, 2009 to start the 30-day Phase I review.  The interesting point is that the Chinese body notified the parties yesterday it would not complete its review by January 27, 2010, the end of the Phase I review period, and that a Phase II review would be initiated. The initial Phase II review period is up to 90 days and can be extended by up to an additional 60 days.  3Com’s filing shows that it and H-P continue to target completion of the merger by the end of April 2010.

Unless China decides that H-P will be a much more formidable threat to Huawei and somehow that it would upset the world of Cisco if China even cares, then this is probably a done deal and just a formality.  If that is not the case, we have not been told anything of any credible merger risks here.  Perhaps the only other issue is if China wants to get even or flex its strength after the Google-China issue.  That merger spread is still wide enough that it is worth a look, although the reality is that this merger has no real antitrust issues considering the size of the companies and considering how troubled 3Com has been on its own.

Today’s filing shows that this merger is closer to happening but it is still under review.  The $7.90 cash buyout price compares to a $7.55 price today.

JON C. OGG