Chinese vendor Huawei has announced that it has withdrawn from its application to acquire assets from the US server company 3Leaf Systems.
The company said in a statement that it had decided to accept the recommendation of the Committee on Foreign…
Chinese vendor Huawei has announced that it has withdrawn from its application to acquire assets from the US server company 3Leaf Systems.
The company said in a statement that it had decided to accept the recommendation of the Committee on Foreign Investments in the US (CFIUS) to withdraw the application, but said that it remained committed to long-term investment in the US.
Its statement suggested that the controversy surrounding the deal had led to its decision.
It said: “The significant impact and attention that this transaction has caused were not what we intended. Rather, our intention was to go through all the procedures to reveal the truth about Huawei.”
According to reports last week, CFIUS told Huawei that if it did not divest 3Leaf Systems, then the committee would recommend to President Obama that the transaction should be blocked.
Huawei had initially told journalists that it would allow the decision to go through to the president.
The US$2m acquisition was completed in May 2010, but CFIUS was reportedly not notified, and decided in January this year to start a retrospective investigation.
The decision comes after several other Huawei strategic moves have been blocked in the US due to national security concerns over its alleged links to the Chinese state and military – while Huawei has always said it is an entirely privately-held company.
In 2009, it bid for a network infrastructure contract with Sprint Nextel, but Sprint gave the contract to Alcatel-Lucent, Ericsson and Samsung. This was despite Huawei and ZTE, another Chinese vendor, reportedly offering lower bids.
It followed a group of US politicians – two Republican senators, Jon Kyl and Susan Collins; the independent senator Joseph Lieberman; and the Republican representative Sue Myrick – sending a letter to the chairman of the FCC with their concerns regarding Huawei’s alleged links to the US military.
In 2008, it had to drop a bid (made jointly with US private equity firm Bain) for computer-equipment maker 3Com due to concerns over security.
Huawei won an injunction in January in a US District Court, which stopped Motorola providing confidential information to the European vendor Nokia Siemens Networks (NSN).
This could delay NSN’s acquisition of Motorola’s network business. Huawei reportedly made a higher bid, but failed to win the contract.
