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US Republican senator backs review of Broadcom's Qualcomm bid

07 March, 2018, 00:28 | Author: Arnold Gilbert
  • Broadcom submitted its initial takeover offer the day after a White House meeting between US President Donald Trump and Broadcom CEO Hock Tan

However, if Broadcom is successful in acquiring Qualcomm, it is expected to break up Qualcomm and sell the pieces.

"We can not overstate the likely harm that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to United States security interests", the letter said.

However, the pre-deal discussions by CFIUS - which are extremely rare - suggest Broadcom's plans to move its headquarters may not be enough to sidestep a national security review that could threaten the deal.

In a surprise move, the Committee on Foreign Investment in the United States asked Qualcomm to delay an annual meeting to give it more time to investigate whether Broadcom's £130 million offer posed a risk to America's national security.

Broadcom is incorporated and now based in Singapore, but CEO Hock Tan announced late previous year while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the USA, likely using San Jose as a base. Such a move could hurt the US effort to develop 5G wireless technology because of the small existing number of suppliers that build the hardware.

The involvement of CFIUS marks a major blow to the deal. According to the NYT, the company "argued that its status as a soon-to-be American company means the deal should not be subject to review". Despite those issues, Qualcomm officials have met with Broadcom executives and last month kept open the possibility of continued talks over price and other concerns.

Broadcom said it would cooperate with the CFIUS review but added that it had just learned that the investigation was due to a secret, voluntary request from Qualcomm in January.

At issue for CFIUS is the fact that Broadcom, based in Singapore, is attempting to acquire the USA -based Qualcomm.

Broadcom initiated the proxy vote in early December as part of its takeover bid, initially putting up a slate of 11 new board candidates who favored the acquisition. With Qualcomm, the panel, which includes representatives from multiple government agencies, is looking at the acquisition before it is complete. Qualcomm on Monday extended its $44 billion tender offer for NXP to March 9, as it awaits clearance from China's MOFCOM, the only regulator globally required to approve the deal that has yet to do so.

On Sunday, CFIUS instructed Qualcomm to delay by 30 days its annual shareholder meeting, which had been scheduled for Tuesday.

U.S. Republican lawmakers on Monday backed a U.S. panel's decision to delay semiconductor firm Qualcomm Inc QCOM.O shareholder meeting to allow for a more extensive review of Broadcom Ltd's AVGO.O takeover bid. Qualcomm is also in a legal battle with Apple over licensing and allegations that it has not delivered on promised rebates - seen by analysts as an effort by Apple to undermine Qualcomm's strong position in mobile chips.


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