tinyfav.com March 21, 2018

US Treasury Just Threw a New Twist in Broadcom's Proposed Qualcomm Takeover

08 March 2018, 01:36 | Myrtle Vega

Qualcomm takeover bid halted by US government

Broadcom's Qualcomm bid gets a kick in the groin from the US government

Qualcomm shareholders were set to vote on whether to hand control of the San Diego cellular technology company to Broadcom on Tuesday morning.

Last month, USA semiconductor testing company Xcerra Corp said CFIUS had blocked its $580 million sale to a Chinese state-backed semiconductor investment fund.

The Treasury Department's concern is both over national security issues and a fear China would be able to gain a strategic advantage in future 5G networks development.

US regulators ordered a delay in Qualcomm's annual shareholder meeting, which was scheduled Tuesday, so they can review a proposed $117 billion hostile takeover bid by Broadcom for national security concerns.

"CFIUS has determined that there are national security risks to the United States as a result of and in connection with the transaction proposed by Broadcom", it said.

Broadcom was forced to delay its annual shareholders meeting two days before it was due to take place after learning Qualcomm had requested the CFIUS investigation, according to CNET. But some other news has come out that might force Broadcom to put the kibosh on its bid for now, and try again at another time. The transaction falls under CFIUS's jurisdiction since Broadcom is now domiciled in Singapore, although it announced at the end of past year it would return to the USA and plans to do so by May.

The government's action highlighted growing U.S. concerns about safeguarding semiconductor technology and cast a doubt on the deal's success.

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Inevitably Broadcom has whacked out a retaliatory PR entitled "Broadcom Pledges to Make the US the Global Leader in 5G". 6, a move it has argued should not make it subject to a review on national security concerns.

If Qualcomm's position is weakened, treasury said, Chinese companies like Huawei Technologies would gain an opening to become dominant. But Broadcom's announcements are starting to smack of reactive desperation as the political game turns against it.

Perhaps its not that surprising, the United States has been pretty negative towards foreign companies lately.

The deal's pushback on national security grounds is seen by some as trade posturing by the Trump administration against China.

Broadcom has struggled to complete its proposed deal to buy Qualcomm as the latter has resisted, citing concerns including the price offered and potential antitrust hurdles.

CFIUS's ability to intervene in the merger could disappear if Broadcom moves its headquarters to the USA, as it promised to do at a public White House ceremony in November.

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