Friday, 22 June, 2018

Government says Broadcom takeover of Qualcomm could threaten national security

Qualcomm shareholder meeting pushed forward by a month Qualcomm takeover bid halted by US government
Oscar Goodwin | 07 March, 2018, 00:28

A USA regulatory body reviewing Broadcom's (AVGO) proposed acquisition of rival chipmaker Qualcomm (QCOM) said the deal could pose a national security risk, casting doubt on whether the hostile takeover can ever get regulatory approval.

Broadcom has sought to acquire Qualcomm since November in what would be the largest tech merger in history at $117 billion, but the USA company rejected each offer. The attorney believes that the letter from the U.S. Treasury spells the end of Broadcom's bid for now.

Some of the United States government's concerns relate to risks associated with Broadcom's relationships with foreign entities, Aimen Mir, the Treasury's deputy assistant secretary for investment security, said in the letter, without identifying who those parties might be.

"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".

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. "China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover".

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.

Treasury also cited the Defense Department's reliance on products made by Qualcomm, which is based in San Diego. Several Republican members of Congress back CFIUS's intervention, including Majority Whip Sen. Tom Cotton of Arkansas.

U.S. President Donald Trump hugs Broadcom CEO Hock Tan as Tan announces the repatriation of his company's headquarters to the United States from Singapore during a ceremony in the Oval Office of the White House in Washington, DC on November 2, 2017. The company will complete a corporate restructure and be headquartered in the U.S.by May 6, 2018.

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.

Broadcom did not immediately return The Daily Caller News Foundation's request for comment.

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