US Calls Broadcom's Bid For Qualcomm a National Security Risk

US Calls Broadcom's Bid For Qualcomm a National Security Risk

Qualcomm quickly responded with a statement accusing Broadcom of continuing a "now familiar pattern of deliberately seeking to mislead shareholders and the general public by using rhetoric rather than substance to trivialise and ignore serious regulatory and national security issues".

The inter-agency body, led by the Treasury, rarely looks at mergers before companies have clinched an agreement, highlighting the urgency of U.S. concerns about safeguarding semiconductor technology.

Qualcomm said in a statement late on March 5 that it was delaying its 2018 annual meeting to April 5 as a result of the CFIUS order.

The US government is concerned that Chinese companies, including the big network equipment and mobile phone maker Huawei Technologies, will take advantage of any openings to take the lead in the next generation mobile phone networks known as 5G.

Broadcom offered $76 per share for Qualcomm last month.

Qualcomm on Monday postponed a shareholder vote on Broadcom's nominees for Qualcomm's board after the Committee on Foreign Investment in the USA, which Treasury leads, ordered a delay. The review will be conducted by the Committee on Foreign Investment in the United States (CIFUS), a body chaired by the US Treasury that can recommend deals be blocked.

More news: USA regulators ask Qualcomm to delay shareholder meeting

Huawei has been forging closer commercial ties with big telecom operators across Europe and Asia, putting the company in prime position to lead the global race for 5G networks despite United States concerns.

Qualcomm also holds a number of government contracts, particularly classified and unclassified work for the Department of Defense, which the Treasury seeks to protect.

Anyway, CFIUS rarely gets involved before a deal is signed – Broadcom and Qualcomm are still negotiating.

Qualcomm pushed CFIUS to intervene in hopes of quashing the hostile takeover.

Singapore-based Broadcom has been working for weeks on a takeover of rival Qualcomm.

Qualcomm rejected a $105 billion offer from Broadcom in November. The transaction falls under CFIUS's jurisdiction since Broadcom is now domiciled in Singapore, although it announced at the end of previous year it would return to the USA and plans to do so by May.

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