Broadcom Bid for Qualcomm Is Likely to Face Longer U.S. Review
Broadcom, whose hostile bid to acquire Qualcomm has been stalled by management opposition and U.S. national-security concerns, is in for a long wait, according to Bloomberg. The deal is likely to be held up even beyond a rescheduled shareholder vote next month as government regulators undertake an extended review of the proposed transaction’s risks.
Qualcomm investors are set to vote April 5 on Broadcom’s nominations to its board, a tally that will serve as a referendum on the $117 billion offer. The chipmaker moved that meeting from March 6 after the U.S. Treasury Department this week ordered a 30-day postponement to allow a full evaluation of potential national-security threats raised by the combination. Getting such a review done in 30 days is unlikely, according to experts on the process, and could take as long as 75 days.
The deal is under review by the Committee on Foreign Investment in the U.S., which investigates risks to national security from foreign takeovers. CFIUS typically takes 30 days to do an initial analysis, then adds another 45-day period to cases that it deems are worth further consideration. It’s also not uncommon for companies to have to refile for approval after the 75-day period expires if they’ve been unable to address all of the panel’s concerns.
CFIUS typically puts the most intense scrutiny on investments in U.S. technology by parties with connections to China. At the end of the review period, it can come back with more requests for information, impose conditions on a transaction or recommend that the president block it. At least a half-dozen technology deals during the Trump administration have fallen apart under the scrutiny of a CFIUS review.