Makers of Computer Network Gear to Join : Acquisitions: 3 Com will buy Chipcom for about $775 million in stock, making it No. 2.

3Com Corp. said Thursday that it has agreed to buy Chipcom Corp. for about $775 million in stock in a deal that would create the nation’s second-largest maker of computer network equipment.

The transaction, 3Com’s 10th acquisition in 3 1/2 years, is the latest in a consolidating industry whose devices help link computers, letting them exchange information more easily. The accord, valued at $39 a share, comes as its explosive growth during the past five years begins to slow.

The combined companies would rank behind only Cisco Systems Inc. in the $10-billion-a-year market for network devices. 3Com would be able to sell a wider range of products to corporate customers that want to buy equipment from as few suppliers as possible.

“This is a business of setting up networks,” said Paul Merenbloom, analyst at Piper Jaffray. “For 3Com, this takes care of how to deal with this marketplace.”

Santa Clara-based 3Com gains Chipcom’s expertise in making high-end computer network equipment and its line of hubs, the electronic devices that serve as switching boards to route data for computers in a network.

3Com is one of the fastest-growing companies in the network-systems market and integrates newly acquired businesses well, analysts said. 3Com, whose revenue is about five times Chipcom’s, said the acquisition is expected to hurt fiscal second-quarter results but will be “neutral to slightly positive” in the second half.

Chipcom shares rose $7.50, or 25%, to $37.25 Thursday. 3Com shares dropped $2.125 to $73.50. Cisco stock gained 87.5 cents to $58.625 and shares of Cabletron Systems Inc., another network equipment maker, rose $2.50 to $59.

Under terms of the transaction, 3Com would exchange 0.53 share for each of Chipcom’s 17.53 million shares outstanding, valuing Chipcom at about $775 million based on Wednesday’s closing prices. The transaction must be approved by shareholders of Southborough, Mass.-based Chipcom.

3Com plans to take a $50-million to $60-million charge in the quarter in which the acquisition is completed, said Eric Benhamou, chairman and chief executive. The companies expect to complete the transaction before December.

The acquisition comes as Chipcom, the sixth-largest network equipment maker, faces declining sales to its biggest distributor, International Business Machines Corp. In the first quarter, Chipcom’s net income plunged 81% after IBM cut shipments of orders for Chipcom hubs because of an inventory backlog. About 38% of Chipcom’s revenue comes from products sold by IBM.

“It’s unclear how long it would have taken Chipcom to recover,” said Noel Lindsay, analyst at Hambrecht & Quist.

This is 3Com’s largest acquisition ever and is more challenging than previous purchases of small, private companies, analysts said.

In 1987, 3Com merged with Bridge Communications, and the company has been expanding by swallowing other companies ever since. Just this year, 3Com bought AccessWorks, Sonix Communications and Primary Access.

With its recent acquisitions, 3Com has broadened its product offering but has remained on the periphery of the core networking business of hubs and routers.

“They could never get into the bread-and-butter part of the market,” said analyst Roxane Googin of Gruntal & Co.

Googin said Chipcom’s presence in the high-end market for hubs complements 3Com’s low-end products and distribution and that there are several products that immediately fit together well.