Mumbai: Bain Capital Partners has called off a deal with a Chinese investor to acquire 3Com Corp for $2.2 billion, sources familiar with the development said.

Bain withdrew its application for US security approval of the deal as it was unable satisfy concerns of the Committee on Foreign Investment in the United States (CFIUS).

The deal would give China's Huawei Technologies Co Ltd as much as a 20.5 per cent stake in the network equipment maker.

Bain and 3Com announced withdrawal of the deal in its current form, although they said they were still in discussions and the proposed transaction had not yet been terminated.

Bain had, in September last year, agreed to buy 3Com in a deal that would also give Huawei Technologies a 16.5 per cent minority stake. Huawei, however, had the option to increase its stake in 3Com by up to an additional 5 per cent.

The deal was subject to scrutiny by CFIUS, an interagency US governmental panel that reviews corporate acquisitions by foreign buyers.

Some US lawmakers have also moved a bill suggesting that the planned buyout of 3Com "threatens the America's national security.

3Com had earlier said Huawei would not have access to sensitive US technology or US government sales and it would lack operational control or the ability to make decisions for the firm.

However, Bain last week offered various concessions to Huawei. including a proposal to divest 3Com's Tipping Point unit, which makes national security software, sources said.

Tipping Point, which 3Com acquired in late 2004 for $430 million, makes "intrusion prevention" systems to protect networks at large businesses and government agencies.

In late January, President George W. Bush issued an executive order spelling out CFIUS review norms, detailing the process to address any potential national security risks. The order also states that the US remains open for business and welcomes foreign investment.