Settlement Reached in U.S. Robotics Suit

U.S. Robotics’ former shareholders have settled lawsuits over the computer modem maker’s $8.54-billion merger with 3Com, for $500,000 in attorneys’ fees and costs. The settlement, which still needs a Delaware judge’s approval, would end all litigation stemming from Skokie, Ill.-based U.S. Robotics’ June combination with Santa Clara-based 3Com, a leading computer-networking company, lawyers said. Shareholders’ willingness to settle without receiving any monetary award shows the merger terms were fair, said Ken Nachman, a Delaware attorney representing U.S. Robotics. Eleven U.S. Robotics shareholders filed suit in Delaware’s Chancery Court in late February after 3Com offered to acquire the company through a stock swap; they claimed that the exchange ratio was unfair, that some U.S. Robotics directors had conflicts of interest preventing them from fairly evaluating the transaction and that the board failed to disclose strong second-quarter earnings that could have persuaded shareholders to reject the merger. As part of the settlement, U.S. Robotics agreed to send a copy of its second-quarter earnings report to all who owned the company’s stock when the merger plan was announced, according to court papers. Shares of the merged firm, 3Com, rose 19 cents to close at $52.50 on Nasdaq.