Skip to comments.U.S. security panel deals major blow to Broadcom's bid for Qualcomm (CFIUS)
Posted on 03/05/2018 2:16:41 PM PST by Ernest_at_the_Beach
By Koh Gui Qing and Sonam Rai
(Reuters) - The U.S. government on Sunday ordered Qualcomm Inc (QCOM.O) to delay its March 6 shareholder meeting, a highly unusual request that will allow time for a national security review of the deal, but that also cast new doubt on Singapore-based Broadcom Ltd's (AVGO.O) $117-billion bid for its U.S. semiconductor peer.
The intervention highlights growing U.S. concerns about safeguarding semiconductor technology. The Committee on Foreign Investment in the United States (CFIUS), which reviews deals for potential national security concerns, does not typically review mergers before companies have clinched an agreement.
CFIUS asked Qualcomm to postpone its shareholder meeting, that had been scheduled for Tuesday, by 30 days. Reuters had reported last week that CFIUS had begun looking at Broadcom's bid amid growing pressure from politicians, including senior Republican Senator John Cornyn.
"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm," the U.S. Department of Treasury, which oversees CFIUS, said in a statement.
As the semiconductor industry is locked in a race to develop chips that power so-called 5G wireless technology, allowing the transmission of data at faster speeds, 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 [HWT.UL], making it a prized asset.
A source familiar with CFIUS thinking said that if the deal was completed, the U.S. military was concerned that within ten years, "there would essentially be a dominant player in all of these technologies and that's essentially Huawei, and then the American carriers would have no choice. They would just have to buy Huawei (equipment)."
(Excerpt) Read more at finance.yahoo.com ...
Remember the “ Uranium One” deal?
Broadcom, AKA Avago, is a spin off of HP. They only headquartered in Singapore for the tax breaks are in the process of moving back to the states. I don’t know what this is about, but I expect that Hock will get his way in the end. He always does, just look at Broadcom/Avago’s stock price over the last 6 or 7 years, the man is a genius.
I’m fine with the US government blocking the deal, if they’ll pay for the losses to the shareholders under the ‘Takings’ Clause.
Qualcomm has been running the company for management’s benefit, not the benefit of shareholders. (Although they did try to appear to clean up their act a bit when Broadcom made its run.) If they pull off this political gambit, it will likely be back to business as usual.
The Broadcom offer was to roughly pay full market price for the stock, and then throw in about $20 of Broadcom stock, as I recall the last offer. It was fair enough that Qualcomm has been having to engage in a tough proxy fight. This latest move of pulling political strings suggests that they were losing that fight.
Thanks for the info.
There was a good chance of this happening, risk of international transfer of restricted tech, or somethin’. Also was a hostile bid.
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