Broadcom’s proposed $140 billion takeover of Qualcomm has been (momentarily) derailed by the US government.
Just as Qualcomm’s investors were ready to vote on a slate of directors Broadcom had nominated, the US government has ordered a national security review into the takeover bid. As a result, Qualcomm has suspended its board vote until April 5, after the government asked for 30 days to review the potential deal.
“This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm,” the U.S. Treasury Department, which oversees CFIUS, said in a statement.
The move by the Committee on Foreign Investment in the United States (CFIUS) comes as the US increases measures to stop foreign firms buying up US telecom equipment and US intellectual property. Earlier this year, Chinese firm Huawei claimed that its bid to buy a US smartphone manufacturer had been blocked by the US government. The lined-up $1.2 billion sale of money transfer firm Moneygram to China’s Ant Financial was also reportedly blocked by the US government.
Investors were to vote on directors Broadcom had nominated for Qualcomm’s board, with early indications that the vote would fall in Broadcom’s favour after two of the big shareholder advisory firms recommended investors vote for some or all of Broadcom’s slate to gain a majority vote on the entrenched Qualcomm board.
Broadcom has accused Qualcomm of underhand tactics to get the US government to intervene. Broadcom claims that CFIUS’ intervention was the result of secret moves made by Qualcomm to seek an investigation into the offer. Qualcomm refute the claims, saying that ‘Broadcom’s claims that the CFIUS inquiry was a surprise to them has no basis in fact” and that Broadcom had been interacting with CFIUS “for weeks”’.