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3Com deal to get security review

WASHINGTON - Bain Capital Partners will submit for a national security review its proposed $2.2 billion buyout of networking equipment maker 3Com Corp.

Government scrutiny was anticipated since the acquisition was disclosed Sept. 28 because of a minority stake in the deal held by a Chinese telecommunications company, Huawei Technologies, which has close ties to China's government.

Companies usually submit deals to the federal Committee on Foreign Investment in the United States voluntarily as a defensive measure. The government can unwind deals that weren't reviewed if federal agencies later determine they pose a threat to national security.

The 12-member committee was created in 1988 but has been much more active since the Sept. 11, 2001, terrorist attacks.

Legal analysts say a key determinant of the government's view of the deal will be whether Huawei is a passive or active investor.

Bain Capital, a Boston-based private equity firm, said, "We believe the US government review in this matter will conclude that the company will be firmly controlled by an American firm, have only a small minority of foreign shareholders, and the deal presents no risks to national security."

Bain was cofounded by former Massachusetts Governor Mitt Romney, a Republican presidential candidate who retired as a partner in 1999.

According to disclosure forms, he still receives modest annual income from Bain.

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