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3Com Takes TippingPoint

3Com Corp. (Nasdaq: COMS) has stumped up $430 million in cash for intrusion and prevention specialist TippingPoint Technologies Inc. (Nasdaq: TPTI) in an attempt to boost its security story (see 3Com Acquires TippingPoint).

3Com is offering $47 per share -- roughly $430 million based on Friday's closing price -- for the Austin, Texas-based company. That would be a 13 percent premium, 3Com executives noted. Understandably, TippingPoint's share price was up $4.89 (12%) to $46.55 late today; 3Com, meanwhile, had dropped 34 cents (8%) to $4.10.

The deal is expected to close in the third quarter of 3Coms 2005 financial year. TippingPoint would eventually operate as a division of 3Com, with TippingPoint CEO Kip McClanahan as division president. McClanahan would report to 3Com CEO Bruce Claflin.

The deal isn't all that surprising. Merger and acquisition activity in the telecom equipment market is starting to pick up, as identified in October’s Light Reading Insider report, "M&A: Consolidation Craze." Increasingly, the major vendors are focused on deals with the long-term potential to help carriers reshape networks for delivery of packet-based, converged services.

TippingPoint’s flagship product is the UnityOne intrusion and prevention device, which came onto the market last year, and the company has already established a reputation as a front-runner in VOIP security (see VOIP Security Poses a Problem and Vendor Points to VOIP Vulnerabilities).

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