Broadcom attacks rival Qualcomm over security review

Broadcom return to US could be complete in May

The Committee on Foreign Investment in the United States ordered a 30-day delay in the hostile-takeover vote.

Broadcom is incorporated and now based in Singapore, but CEO Hock Tan announced late a year ago while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the US, likely using San Jose as a base. Investors were poised to vote at the meeting on the Broadcom bid. Broadcom's wireless smartphone chip technology is used in Apple and Android mobile devices and in set-top boxes, data storage devices, ...

Qualcomm has maintained from the beginning that the Broadcom deal, originally valued at $121 billion, undervalues the company.

"We can not overstate the likely harm [from a Broadcom hostile takeover] that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to the United States security interests", said the Gallagher letter. "They would just have to buy Huawei (equipment)".

Qualcomm, for its part, rejected many of Broadcom's points, and noted the issue is a "very serious matter". According to the NYT, the company "argued that its status as a soon-to-be American company means the deal should not be subject to review". He has proposed legislation to tighten CFIUS' scrutiny of deals. To keep the deal alive, Qualcomm announced today that it extended its offer until March 9 at 5 p.m. ET.

As Fortune reports, shareholders would have been able to vote on the replacement of six Qualcomm board members with Broadcom's nominees and the election of Broadcom's slate "would effectively be an endorsement of the takeover".

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"This shows how indirect exposure to China is a frequent, but under-noticed, source of perceived national security risk", said Mario Mancuso, a former CFIUS member who is now a partner at law firm Kirkland & Ellis LLP.

"I support the idea that the committee on foreign investment takes a close look at that to see that American interests are protected", he added. Despite those issues, Qualcomm officials have met with Broadcom executives and last month kept open the possibility of continued talks over price and other concerns.

The government stepped in to effectively delay the apparent hostile takeover of US chipmaker Qualcomm by Singapore-based Broadcom Limited that would be the largest tech merger ever.

San Jose-based Qualcomm Inc. will push back the March 6 annual shareholder meeting by at least 30 days to comply with a CFIUS order as the national-security-focused interagency committee investigates Broadcom Corp.'s takeover efforts. Broadcom is based in Singapore.

"Broadcom continues to pursue the redomiciliation process as expeditiously as possible", Broadcom said. With Qualcomm, the panel, which includes representatives from multiple government agencies, is looking at the acquisition before it is complete. But CFIUS-which includes officials from the Defense, Energy, Homeland Security, and Justice departments-is taking more time to review the bid to determine whether a foreign acquisition of Qualcomm constitutes a national security threat.

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