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Cumming's Take: US Deal-Review Panel Cites Risks in Private-Equity Model

Cumming's Take: US Deal-Review Panel Cites Risks in Private-Equity Model

The proposed takeover of Qualcomm by [Broadcom] is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.

Beyond those 5G concerns, there's even more to Trump's decision to block the deal, experts said.

There's no indication of how long the abandonment process may take, but Qualcomm and Broadcom will have to provide the Committee on Foreign Investment in the U.S. with a weekly certification that they are going through any and all necessary steps for the completion of this process, and in addition to the weekly certifications they'll also need to include detailed documentation of what steps have been taken as of that certification date.

"Qualcomm has become well-known to, and trusted by, the USA government", said Deputy Assistant Secretary for Investment Security Aimen Mir.

In recent weeks, 5G networking-which Qualcomm has made a central focus of its business-has emerged to draw the attention of regulators and lawmakers, overtaking other issues such as the billions that Broadcom is willing to spend on the deal and oversized influence the combined companies would have in the global technology industry.

Broadcom-which was formerly known as Avago and adopted its new name after buying the original US -based Broadcom in 2016-is based in Singapore.

Broadcom said its move to the United States meant national security concerns would have no longer been a problem for closing the deal.

In the letter, a Treasury official said CFIUS accelerated its investigation into the bid in light of Broadcom's violations of the panel's earlier order. Broadcom, a Singapore-based company, has been attempting to nab Qualcomm for months, something the latter company has been resistant to.

A person familiar with CFIUS's investigation, who requested anonymity to speak freely about the matter, said this strategy may have doomed the transaction.




In a surprising statement late today from the White House, President Donald Trump unilaterally prohibited Broadcom's proposed takeover of Qualcomm (NASDAQ: QCOM), the world's biggest maker of chips for smartphones.

Trump hosted Broadcom CEO Hock E. Tan in the White House past year when the executive announced the proposed move. "I don't know that they are going to be able to wiggle their way free just by re-domiciling".

All 15 individuals listed as potential candidates on the Form of Blue Proxy Card filed by Broadcom and Broadcom Corporation with the Securities and Exchange Commission on February 20, 2018 (together, the Candidates), are hereby disqualified from standing for election as directors of Qualcomm.

Broadcom said in a statement that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

If Qualcomm's "technological leadership" diminishes, Mir said in his March 5 letter, Chinese tech companies stand to gain in the race to develop 5G.

Trump noted the company already employed over 7,500 workers in the USA and said: "We are looking forward to seeing that number grow very substantially".

In an effort to alleviate these concerns, Broadcom has been rushing to redomicile (legally move the company) to the United States.

Qualcomm is embroiled in a fierce legal fight with Apple over the amount it charges for use of its patents, and Broadcom CEO Tan has said Qualcomm's patent licensing business model is "broken".

Shares of Broadcom rose less than 1.0 percent to $264.10 in after hours trade while Qualcomm fell 4.3 percent to $60.14.


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