China's Huawei withdraws from U.S. company purchase 2011-02-21 18:25:33

SHENZHEN, Guangdong, Feb. 21 (Xinhua) -- A leading Chinese telecommunication equipment manufacturer confirmed Monday that it would abandon its efforts to acquire assets of a U.S. computer company as recommended by a security panel.

"Huawei Technologies Ltd. has withdrawn its application to the Committee on Foreign Investment in the United States (CFIUS) for approval of its purchase deal with 3Leaf Systems," a Huawei senior executive told Xinhua in a telephone interview.

"That means Huawei will also pull out of the 3Leaf Systems purchase deal," the executive said on condition of anonymity.

Huawei bought servers and intellectual property rights from bankrupted 3Leaf Systems last May for 2 million U.S. dollars.

Huawei said it did not apply for approval from the CFIUS in advance because it bought only assets of the company, not the company itself.

On Feb. 11, the CFIUS recommended Huawei to part with the assets it had bought, citing security reasons.

Previously, Huawei said it would not withdraw from the purchase and welcomed the U.S.security panel inquiry.

"It's a hard decision, but we have decided to accept the CFIUS recommendation to withdraw our application to acquire specific assets of 3Leaf Systems," Huawei said in a statement.

"There will definitely be a series of steps taken to (cancel the deal), but it is still not clear how this will be done," the executive told Xinhua.

It is Huawei's latest setback to acquire assets in the United States.

In 2008, its buyout attempt of 3Com with Bain Capital was rejected by the U.S. government for "security reasons." In 2010, Huawei was once again blocked from purchasing the mobile wireless network division of Motorola, as well as 2Wire, an American supplier of broadband Internet software.