Bidding War for Chipcom Could Erupt : Computers: Cabletron wants stake in networking equipment maker.

Share via
From Associated Press

Cabletron Systems raised the prospect of a bidding war for Chipcom Corp. on Friday, a day after another data networking company said it would buy Chipcom for more than $750 million.

Cabletron asked the Federal Trade Commission for clearance to buy up to 50%, or possibly more, of Chipcom’s outstanding common stock, according to a statement Chipcom issued shortly before the close of stock trading.

The move may signal that Cabletron is getting ready to try to prevent the merger of 3Com Corp. and Chipcom, an alliance that could harm Cabletron’s sales of specialized machines for moving data in large computer networks.


The news sent Chipcom’s stock price, which had been mildly higher in Nasdaq trading, up $6.625 to $43.875 for the day, an 18% jump.

Cabletron stock closed down $2.25 at $56.25 on the New York Stock Exchange, and 3Com finished up $2.75 at $76.25 on Nasdaq.

The move stunned analysts, who just a day earlier had praised fast-growing 3Com on its latest acquisition.

“This came as quite a big surprise to me,” said Esmeralda Silva, an analyst with International Data Corp. in Framingham, Mass. “I thought it was pretty much a done deal” between 3Com and Chipcom.

Chipcom and 3Com said they will proceed with their merger, valued at about $780 million based on Friday’s stock prices.

“We do not know what Cabletron’s intentions are,” Rob Held, Chipcom chief executive and president, said in a statement. “We remain fully committed to our previously announced merger with 3Com Corp.”


Katherine Patterson, director of investor relations at Santa Clara, Calif.-based 3Com, said Cabletron’s application is not a formal takeover bid and that it is too early to judge what is behind the decision.

Executives at Cabletron, based in Rochester, N.H., did not return calls seeking comment.

All three companies make data networking equipment, such as adapter cards and so-called router and hub computers.

Chipcom, based in Southborough, Mass., near Boston, is the third-largest maker of “chassis hubs” and had sales of $268 million last year.

The hubs connect hundreds of computers in a single network and are typically bought by large corporations. 3Com’s strength is in lower-end “stackable hubs” that connect as many as 50 computers.