Qualcomm takeover bid halted by U.S. government

Qualcomm takeover bid halted by U.S. government

The letter emphasized the classified nature of some of CFIUS's concerns, including Broadcom's relationships with "third party foreign entities".

The inter-agency body, led by the Treasury, rarely looks at mergers before firms have clinched an agreement, highlighting the urgency of USA concerns about safeguarding semiconductor technology and casting doubt on the deal's success.

The letter, dated 5 March, was made public by Qualcomm on Tuesday.

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The US government is concerned that Chinese companies, including 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. 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.

US regulators are looking closely at Broadcom's offer for Qualcomm.

The review of the Broadcom deal illustrates the United States government's expanding focus on the competitiveness of the national semiconductor industry as China advances, regulatory experts said. CFIUS, under former President Barack Obama and current President Donald Trump, has soured on high-tech deals, particularly involving semiconductors, or involving sensitive information about American citizens.

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Broadcom said on March 5 that CFIUS' intervention was the result of secret moves made by Qualcomm on January 29 to seek an investigation into the offer, which Qualcomm's board has said significantly undervalues the company.

In a statement Monday, Broadcom blamed Qualcomm for spurring the intervention - and called the move by CFIUS "a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees".

"Qualcomm's work is too important to our national security to let it fall into the hands of a foreign company-and in a hostile takeover no less", Cotton said in a statement. Broadcom cried foul, saying this latest turn of events is an "engagement theatre", aimed at changing the will of Qualcomm stockholders. The transaction falls under CFIUS's jurisdiction since Broadcom is now domiciled in Singapore, although it announced at the end of past year it would return to the U.S. and plans to do so by May.

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