H-P Closing In on 3Com: Report

PALO ALTO, Calif. (TheStreet) -- Hewlett-Packard(HPQ) is set to win European Union approval for its surprise $2.7 billion acquisition of 3Com(COMS), according to Reuters.

Citing a person familiar with the situation, Reuters reports that the deal is likely to get "unconditional clearance" from E.U. competition regulators. The European Commission has until Friday to decide whether to approve the deal, extend its review or block the transaction, it said.

E.U. regulators are no strangers to playing hardball with U.S. firms, as evidenced by Oracle's(ORCL) protracted acquisition of Sun, although it seems that H-P will soon be swallowing 3Com.

The deal, which has already been approved by 3Com shareholders, is seen as key to boosting H-P's presence in China.

During its recent fourth quarter, H-P's China revenue was up more than 20% compared to the prior year's quarter, and the tech bellwether is keen to tap into China's economic boom.

In addition to being the world's most populous nation, China is also in the midst of an economic explosion, which will drive demand for technology.

Tech research firm IDC, for example, estimates that the Chinese IT services market alone grew from $7.7 billion in 2007 to $9.5 billion last year, and is expected to experience a compound annual growth rate of almost 14% between 2008 and 2013.

3Com brought in revenue of just $1.3 billion in fiscal 2009, a slight increase on the prior year. More than half of the company's sales -- just over $700 million -- were generated in China, up from about $600 million in the prior year. Set against this backdrop, the Marlborough, Mass.-based firm is a good fit for H-P, which is frantically expanding its Chinese business, forging deals with the likes of China Mobile.

H-P shares crept up 2 cents, or 0.04%, to $48.14 on Wednesday, despite a modest retreat in tech stocks that saw the Nasdaq fall 0.07%.

-- Reported by James Rogers in New York

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