3Com Corporation and Huawei Technologies are to form a joint venture (JV) domiciled in Hong Kong with principal operations in Hangzhou, China.
Huawei’s contribution to the JV will include LAN switches, routers, engineering, sales/marketing resources and personnel, and licenses to its related intellectual property. 3Com’s contribution will include $160 million in cash, assets related to its operations in China and Japan, and licenses to its intellectual property.
The name of the joint venture will be 3Com-Huawei in English and Huawei-3Com in Chinese.
3Com will have the right to sell the JV’s products under the 3Com brand everywhere in the world except China and Japan where the products will be sold under the JV’s brand.
In the Chinese and Japanese markets, the JV will sell both the former Huawei networking product line, which has been transferred into the JV, as well as the existing 3Com product line based on an OEM agreement between the JV and 3Com.
Huawei will own 51% and 3Com will hold a 49% ownership in the new JV. In two years, 3Com has the option to boost its ownership to 51%, in which case Huawei will own 49%.