In approving a defunct $2.2 billion buyout by Bain Capital Partners LLC and its Chinese partner, 3Com shareholders cleared the way for a legal battle over a $66 million breakup fee.In a Friday filing with the U.S. Securities and Exchange Commission, 3Com said nearly 70 percent of its shareholders were in favor of the acquisition by the Boston-based private-equity firm and Huawei Technologies Co. On Thursday, Bain said it was ending its efforts to complete the acquisition, citing impeding national security concerns by the U.S. government.

"We don't believe the deal is terminated," said John Vincenzo, a 3Com spokesman. "We are going to continue to operate as the agreement stands."

3Com, which is based in Marlborough, Mass., is disputing Bain's reasons for pulling out of the deal. It has also said it will pursue the $66 million breakup fee.



Bain said it offered 3Com several proposals to restructure the deal to satisfy national security concerns by the U.S. government, but failed to reach an agreement with 3Com. Bain said it had also been notified that the Committee on Foreign Investment in the United States intended to block the deal.

Last month, Bain offered several concessions to CFIUS to win approval of the deal, including the divestment of 3Com's Tipping Point subsidiary, which makes network-security software. CFIUS is a 12-agency group with the authority to recommend the White House block or alter terms of deals that involve national security.

However, 3Com later withdrew its voluntary CFIUS application, after it was unable to gain approval by the committee.

While 3Com acknowledges it was presented with alternatives to salvage the buyout, such fixes were not in the best interest of the company or its shareholders.

"The company that Bain was attracted to still exists," said Vincenzo. "This is not a company that feels it has to sell itself."

A representative from Bain could not immediately be reached for comment.

Since the deal was announced in September, the proposed acquisition immediately set off alarms in Washington. Lawmakers and Bush administration officials have expressed concerns that sensitive military technology could be transferred to China through the 16.5 percent 3Com stake that would be held by Huawei, which has strong ties to the Chinese' military.

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