Broadcom pledges 5G commitment to keep Qualcomm offer on track

Randolph Lopez
March 8, 2018

The Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security concerns, rarely reviews mergers before companies have clinched an agreement.

Broadcom has offered $117 billion to buy Qualcomm, a leading developer in 5G tech.

Qualcomm said on Monday it was delaying its annual meeting to April 5. If it achieves its goal of acquiring Qualcomm, Broadcom said it expects to have more than 25,000 employees in the U.S.

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. "This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees", Broadcom said in the statement Monday. Qualcomm said in response that Broadcom misinterpreted the public's and investors' mind while ignoring national security issues and regulatory matters.

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It also said Broadcom's claims it was unaware of the CFIUS process had "no basis in fact". "Broadcom has been interacting with CFIUS for weeks and made two written submissions to CFIUS". The delayed meeting and CFIUS investigation are the latest roadblocks the Singapore-based Broadcom has faced in its attempts to acquire Qualcomm.

Broadcom said it is run by a board of directors and senior management team consisting nearly entirely of Americans. "Articulation of the potential national security concerns, in significant part, is classified". 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. Washington has always been wary of acquisitions of sensitive technology, particularly by Chinese buyers, but scrutiny has intensified under Trump, according to lawyers who work on such deals. Several Republican members of Congress back CFIUS's intervention, including Majority Whip Sen. The convoluted claim, related to a Department of Treasury letter, is that if Broadcom buys Qualcomm, then China will fill a theoretical void left by Qualcomm no longer being a USA company. "A disruption of Qualcomm's R & D efforts would in effect hand the growing competition for 5G to China". But Broadcom's announcements are starting to smack of reactive desperation as the political game turns against it.

Ultimately, the CFIUS will look at the deal from a national security standpoint.

Other reports by GlobalViralNews

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