tiptrot.com June 24, 2018

Broadcom takeover bid for Qualcomm stalled by USA security committee

08 March 2018, 01:30 | Bernice Figueroa

Qualcomm takeover bid halted by US government

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Qualcomm, however, said on February 26 that it would accept Broadcom's proposal only after the price is raised to US$160 billion.

Losing this key role in standards-setting could pose a threat to U.S. national security and also open up a place for China to fill with its own wireless companies, such as Huawei, CFIUS said.

The U.S. government's Committee on Foreign Investment in the United States ordered a national security review of Broadcom's proposed deal Sunday in an unusual move that prompted Qualcomm to delay a March 6 shareholder meeting.

"Qualcomm has become well-known to, and trusted by, the U.S. government", the U.S. Department of Treasury, which manages the CFIUS process, said in a letter to the companies Monday.

Qualcomm's shareholder meeting is now scheduled for April 5.

Broadcom, based in Singapore, has pledged to move its headquarters to the USA, which it believes would remove CFIUS jurisdiction. That's a concern for the government, as Qualcomm is critical to maintaining the US's position of leadership in semiconductors and wireless networking.

"This will ensure America's lead in future wireless technology", Broadcom said in its statement. The letter notes that Qualcomm typically ranks second among semiconductor companies in R&D spending, with Intel taking the number one spot.

Qualcomm's 5G chips are used by the Pentagon, and if it loses its competitive standing under the Broadcom umbrella, it could leave China's Huawei as the dominant chipmaker, Reuters reported, citing a source familiar with CIFIUS' thinking. If it achieves its goal of acquiring Qualcomm, Broadcom said it expects to have more than 25,000 employees in the U.S. But Broadcom's announcements are starting to smack of reactive desperation as the political game turns against it.

CFIUS can approve or propose changes to deals, but only the president can block a transaction on national security grounds.

In contrast to the casual geopolitical xenophobia of the "we don't want our companies acquired by dodgy foreigners" argument, the fear asset stripping on an unprecedented scale would appear to have a bit more substance.

Broadcom's CEO Hock Tan joined US President Donald Trump in the White House previous year to announce he was moving Broadcom's headquarters to the US from Singapore - a move that appeared created to appease US officials and facilitate future acquisitions.

Broadcom still is moving ahead, and the company believes it can work things out with the CFIUS in time for Qualcomm stockholders to vote for a new Board run by Broadcom.

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