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Huawei seeks to buy 49% stake in JV
Source: Agencies |
01:11 UTC+8 November 16, 2011
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HUAWEI Technologies, the world's No. 2 telecom equipment maker, plans to buy the remaining 49 percent stake in a joint venture with Symantec Corp that it does not already own for US$530 million to bolster its corporate security solutions business.
The deal allows Huawei to boost its product portfolio for its enterprise customers and helps Symantec improve its bottom line by dropping the loss-making business, even as the value of the deal fell below market expectations.
The deal is subject to approval from regulators in the United States, but analysts and company executives foresee few hurdles because the joint venture, called Huawei Symantec, was set up in Hong Kong and Huawei already owns the majority stake.
"Whether this deal will complete or not ... it is still a question mark for now, but I feel that they have a better chance since this joint venture is established in Hong Kong," outside Chinese mainland, said Cathy Huang, an analyst at Frost & Sullivan in Singapore.
Huawei expects the deal, which some analysts estimated could have been worth about US$1 billion, to close in the first quarter of next year.
"We likely overestimated Symantec's hand in the negotiation given the joint venture was operated under the control of Huawei," Citi said in a report.
Shenzhen-based Huawei and smaller crosstown rival, ZTE Corp, have previously encountered obstacles in clinching some deals in the United States due to national security concerns.
Earlier this year, Huawei backed away from its acquisition of US server technology company 3Leaf's assets, bowing to pressure from a US government panel that suggested it should divest the assets.
The deal allows Huawei to boost its product portfolio for its enterprise customers and helps Symantec improve its bottom line by dropping the loss-making business, even as the value of the deal fell below market expectations.
The deal is subject to approval from regulators in the United States, but analysts and company executives foresee few hurdles because the joint venture, called Huawei Symantec, was set up in Hong Kong and Huawei already owns the majority stake.
"Whether this deal will complete or not ... it is still a question mark for now, but I feel that they have a better chance since this joint venture is established in Hong Kong," outside Chinese mainland, said Cathy Huang, an analyst at Frost & Sullivan in Singapore.
Huawei expects the deal, which some analysts estimated could have been worth about US$1 billion, to close in the first quarter of next year.
"We likely overestimated Symantec's hand in the negotiation given the joint venture was operated under the control of Huawei," Citi said in a report.
Shenzhen-based Huawei and smaller crosstown rival, ZTE Corp, have previously encountered obstacles in clinching some deals in the United States due to national security concerns.
Earlier this year, Huawei backed away from its acquisition of US server technology company 3Leaf's assets, bowing to pressure from a US government panel that suggested it should divest the assets.
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