According to Reuters sources, the U.S. national security team is discussing a merger by Singapore chipmaker Broadcom to acquire rival U.S. chipmaker Qualcomm, which is investigating possible deals that threaten U.S. national security.
It is reported that CFIUS, a privately-held security agency sub-committee, has communicated with at least one of the companies involved in the merger and met in January 2018 to discuss the potential acquisitions of Broadcom and Qualcomm. US Senate John Cornyn urged Steven Mnuchin, the U.S. Treasury secretary, to start a review of the deal with the U.S. Foreign Investment Commission or CFIUS.
In fact, it is very rare for CFIUS to investigate possible transactions before the transaction takes place. At present, the transactions between Broadcom and Qualcomm are still underway. There are still differences in the purchase price. Broadcom plans to relocate the headquarters before the transaction is completed The United States, however, is not enough to evade the national security review conducted by government regulators.
In a letter to Senate John Cornyn addressed to the finance minister, CFIUS responded to concerns that Broadcom failed to reach an acquisition agreement with Qualcomm, but the company did not give up and put forward a six-person nomination list to put pressure on Qualcomm's board of directors to try Malicious acquisition. If six people, nominated by Broadcom at the March 2018 general meeting, enter the Qualcomm board, Broadcom may gain control of Qualcomm, which CFIUS has not yet completed. Therefore, John Cornyn recommended that CFIUS immediately start the review of Broadcom's acquisition of Qualcomm and resolve any potential threat to national security ahead of Qualcomm's shareholders' meeting on March 6, 2018.
CFIUS's review does not mean that it will stop the transaction, the U.S. government for a long time the transaction involving the semiconductor industry are very strict review. Linley Group semiconductor expert Linley Gwennap said QUALCOMM is one of the most important companies in the semiconductor industry in the United States among the semiconductor industry, the United States Foreign Investment Commission is bound to be more cautious about any acquisition involving Qualcomm, Singapore It is nominally a friendly country to the United States, but the flow of any top technology to overseas companies can be very dangerous.
Broadcom is also aggressively seeking CFIUS approval for the acquisition of Brocade Communications Systems by the end of 2017, culminating in the deal being approved by Broadcom CEO Hock Tan after meeting with U.S. President Donald Trump and announcing that it will relocate its headquarters to the United States.
Lawyers familiar with the CFIUS review process said it was unprecedented for Broadcom to relocate its headquarters to the United States to evade censorship, but that strategy might work.
As far as the current attitude of the two parties is concerned, whether the deal can be reached remains unknown. On February 26, 2017, Qualcomm Chairman Paul Jacobs wrote to Broadcom CEO Hock Tan that it would launch due diligence that could lead to both parties' transactions.
However, Broadcom does not approve of this practice. The company said last week that Qualcomm has so far failed to confirm whether it will hold its shareholders' meeting on March 6, 2018 in accordance with its previous plan. The acquisition of Broadcom is not for the purpose of initiating due diligence, Without due diligence, it will still choose to promote the deal. If you do not schedule the shareholders meeting, Broadcom nominated candidates for the board of directors will not have access to Qualcomm's control, the current Board of Qualcomm is still reluctant to communicate, but Broadcom's attitude has not changed, hope March 6, 2018 shareholders Communicate with the new board members before the conference.
If the acquisition of Qualcomm Broadcom can eventually reach the transaction, the acquisition amount will reach 1,420 billion US dollars. Earlier, Broadcom's $ 130bn bid was vetoed by Qualcomm's board, which raised its bid to at least $ 160bn, including $ 25bn in debts, and the two sides still have huge disagreements about prices, and if the two merged, they would be The world's third largest semiconductor company, second only to Samsung and Intel. The current market capitalization of Qualcomm is about $ 99 billion, and Broadcom's market capitalization is $ 104 billion.
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