Broadcom cries foul as USA regulator intervenes in Qualcomm saga

Angelica Greene
March 8, 2018

With 11 seats on the Board, Broadcom lobbed in a slate of 6 candidates, hoping that it could win control of Qualcomm and rubber stamp Broadcom's $117 billion bid for the Snapdragon chip designer.

The government's move though could now spoil Broadcom's efforts to take over the American company.

Since Trump took office previous year, at least half a dozen foreign acquisitions of American technology firms have been scuttled in the face of national security concerns raised by the Committee on Foreign Investment in the USA, or CFIUS, which reviews overseas takeovers. That would move the voting back to April 4th.

Broadcom said in a statement Monday that it had to delay its annual shareholders meeting on short notice after learning Sunday that Qualcomm had asked for the CFIUS investigation.

The investigation by CFIUS, which considers national security risks to foreign acquisitions of USA companies, came after Qualcomm filed a notice with the panel seeking a review. San Diego-based Qualcomm has emerged as one of the biggest competitors to Chinese companies vying for market share in the sector, such as Huawei Technologies Co., making Qualcomm a prized asset.

In the letter, deputy investment security secretary Aimen Mir indicated that CFIUS believe that deal would put United States security in jeopardy.

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Broadcom also promised to create a $1.5 billion fund with a focus on innovation to train and educate the next generation of USA engineers to ensure the country's lead in future wireless technology. The panel has recently blocked several deals by Chinese buyers, including Ant Financial's proposed takeover of MoneyGram, a money-transfer company. Broadcom, however, is based in Singapore and is in the process of reincorporating in the US. Broadcom also claimed that Qualcomm did not disclose the request to Broadcom.

KitGuru Says: It looks like the USA security panel found plenty of reasons for the government to be concerned over Broadcom's attempts to take over Qualcomm. Qualcomm also sells to Huawei, according to Bloomberg.

In this case, Qualcomm had rejected Broadcom's offer, noting that the sale price was too low.

In terms of products, "Qualcomm now holds active sole source classified prime contracts" with the Department of Defense, it said.

The letter said that, as with every investigation, the review will consider the potential risk of an unnamed "actor" working through Broadcom to hurt U.S. national security, adding that the bulk of CFIUS' concerns were classified.

Other reports by GizPress

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