Broadcom’s hostile bid for Qualcomm is facing an investigation into national security concerns.
Claudia Cruz/CNETThe US government has called for an investigation of Broadcom’s proposed acquisition of rival chipmaker Qualcomm, worrying the hostile bid could pose a risk to US national security.
The objection was raised by the Committee on Foreign Investment in the United States, a government panel that reviews mergers that could result in a foreign company controlling an American business. The panel, also known as Cfius, is specifically concerned with Broadcom’s relationships with foreign entities, worrying the deal could weaken “Qualcomm’s technological leadership,” according to a letter from a United States Treasury official.
“China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover,” the official said in the letter. A Cfius review is often enough to quash a deal.
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The letter and its subsequent investigation is the latest twist in what could be the largest-ever tech acquisition. A combination of the two companies would create a chip giant supplying components to a wide array of electronic gadgets found in your home or pocket. A deal would also mark a surprising turnaround from nearly a decade ago, when the companies were bitter courtroom rivals.
Broadcom, a maker of chips for everything from cable modems to set-top boxes to digital video recorders, announced an unsolicited bid of $130 billion for Qualcomm in November.
Qualcomm, the world’s largest maker of chips and processors for phones, rejected a revised, $121 billion buyout in February. Talks grew more contentious a few weeks later when Broadcom lowered its buyout offer for Qualcomm to approximately $117 billion, making “an inadequate offer even worse.”
Broadcom said it was forced to delay its annual shareholders meeting two days before its scheduled time after learning Sunday that Qualcomm had requested the Cfius investigation.
“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 a statement Monday.
“This can only be seen as an intentional lack of disclosure — both to Broadcom and to its own stockholders,” Broadcom said.
Representatives for Qualcomm didn’t immediately respond to a request for comment.
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