Broadcom is like a dog with a bone in its attempt to acquire to Qualcomm, first by proposing an unsolicited buyout offer and now through an attempted hostile takeover. Whether or not Broadcom is ultimately successful in its bid to buy Qualcomm remains to be seen. One potential roadblock, however, is how regulators would view a potential deal. The concern isn't that a deal would create a monopoly (or at least that is not the only concern), but what kind of security issues might arise if Broadcom acquired Qualcomm.
Citing "two people familiar with the matter," Bloomberg says the Committee on Foreign Investment, a secretive US panel tasked with reviewing whether acquisitions of American companies raises national security concerns, is currently looking into the situation between Broadcom and Qualcomm. It's said that members of the panel are discussing whether to open an official review, presumably in part because Qualcomm does not favor a buyout.
After Qualcomm rejected Broadcom's initial $103 billion offer, Broadcom sought to replace all 11 of Qualcomm's board members with its own candidates. That fell through as well, so Broadcom more recently shifted its efforts to replacing just six of Qualcomm's board members, which would the company a majority presence so that it would have an easier time pushing through a merger.
Broadcomm also increased its offer to $121 billion in cash and stock, which Qualcomm also rejected. In a statement issued today, Qualcomm said that Broadcom has not been acting in good faith negotiations, and that the company has been unwilling to outline its proposal and the future direction of Qualcomm's licensing business. As such, Qualcomm has significant concerns over both the value of the offer and regulatory hurdles.
"All three items—price, closing certainty and the licensing business—are critical to the board's evaluation of Broadcom's proposal, and without a meaningful discussion or an agreement on these items, the Qualcomm board believes it is not in the best interest of Qualcomm's stockholders to elect Broadcom's nominees. The Qualcomm Board of Directors remains ready to engage with Broadcom on these issues both before and after the March 6 stockholder meeting," Qualcomm said.
March 6 is when Qualcomm's investors will vote on Broadcom's nominees. Broadcom, meanwhile, said it is confident that it would obtain all the necessary regulatory approvals for an acquisition within a year of agreeing to a deal.
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