3Com Settles Investor Lawsuits
Friday November 3 8:51 PM ET
SANTA CLARA, Calif. (Reuters) - 3Com Corporation (NasdaqNM:
COMS - news) agreed on Friday to settle for $259 million in
cash two nagging shareholder class-action lawsuits arising
out of its 1997 merger with US Robotics.
``The terms of the settlement are the outcome of mediation
and are a compromise between the parties involved,'' the
company said in a statement, noting that the deal still
awaited judicial review and confirmation.
``There is no admission of liability on the part of 3Com or
the individuals named in the lawsuits.''
The networking giant merged with top modem maker, US Robotics,
in June, 1997 in a stock-swap worth $8.5 billion, in what was
then touted as a synergistic mega-merger.
But in two related lawsuits, one in federal and one in California
state court, 3Com was accused of inflating its stock price by
overstating certain financial figures, and also hiding key
drops in demand for US Robotics' modem products.
Top executives at 3Com and US Robotics were also accused of
selling a total of four million shares for $200 million
while the stock was peaking. The stock price later crashed
after 3Com belatedly revealed a huge backlog of unsold US
Robotics modems, and resulting fiscal losses that had not
been originally made public.
Among those accused in the federal lawsuit of insider trading
were Eric Benhamou, chief executive of 3Com, who is stepping
down next year, and Casey Cowell, then-chief executive of US
Robotics.
``We vigorously pursued this case for three years and have
made a very substantial recovery on behalf of shareholders,''
said Robert Kaplan, one of the lead counsels for the plaintiffs
with New York-based law firm, Kaplan, Kilsheimer & Fox.
``It's a good settlement.''
Mark Michael, 3Com's senior vice president and general counsel,
said the settlement ``closes the book on all outstanding
issues related to 3Com's merger with US Robotics.''
Purchasers of 3Com stock between April 23 and November 5, 1997,
will be eligible for part of the award.
3Com ended regular trading Friday at $17-3/16. It has traded
between $12-8/16 and $119-12/16 in the past year.
o~~~ O |
