Since the committee announced earlier this month that it was investigating the hostile bid for Qualcomm, Broadcom has sped up the redomiciling process, according to The Wall Street Journal. Its largest to date is its $16.7bn acquisition of programmable chip maker Altera, followed by the $15.3bn purchase of vehicle vision company Mobileye previous year. Qualcomm has also been trying to purchase NXP Semiconductors, to make matters more complicated.
And, according to a new CNBC article today, the CFIUS has confirmed that the proposed transaction does raise national security concerns.
Among its concerns are that, by financing the acquisition with some $106bn in debt, Broadcom will be forced to slash R&D spend, namely in 5G technologies.
Had Broadcom been a US company, it's possible that it could have completed a hostile takeover of Qualcomm, based in San Jose, Calif., without CFIUS getting involved. Finally, Cornerstone Wealth Management LLC acquired a new position in shares of Broadcom in the fourth quarter valued at $210,000.
The fallout has left the deal of buyout open for everyone.
Last week it also pledged to make the U.S. the leader in 5G through investment, including launching a new $1.5 billion fund to train and educate the next generation of engineers in the United States. And that action could well remove Broadcom from the purview of the U.S. Treasury Department's Committee on Foreign Investment in the U.S. (CFIUS).More news: Serena Williams to launch cosmetics line
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CFIUS's concern with the merger includes national security issues and a fear China would be able to gain a strategic advantage in future 5G network development.
"Broadcom will not only maintain the R & D resources Qualcomm devotes to 5G and innovation in future wireless standards - we also will focus R & D spend to those critical technologies that are essential to the USA", the company said in a statement. The move could minimize CFIUS' power, with the body regulating foreign investments.
Separately, Qualcomm said it discontinued the role of executive chairman and named a new non-executive chairman as it seeks to curry favour with shareholders ahead of a proxy fight with Broadcom, now slated for 5 April.
Days before the first bid in November, US President Donald Trump said Broadcom planned to redomicile to the United States from Singapore. Also, CEO Hock E. Tan sold 20,000 shares of the stock in a transaction that occurred on Friday, December 15th.
United States officials have also substantiated dangers to USA national security from the proposed merger, the network reported, adding that Treasury had informed both Qualcomm and Broadcom of these findings on Sunday, ahead of a Monday meeting to discuss the matter. One source told the Journal that it would be unlikely.