Instead, Broadcom has resorted to what is essentially a hostile takeover by putting forward a slate of six Broadcom nominees for Qualcomm's 11-member board. Broadcom then attempted to force a vote to install six new members on the 11-person board, who would effectively do Broadcom's bidding, but the USA government intervened. That would move the voting back to April 4th.
The Committee on Foreign Investment in the United States (CFIUS) has been reviewing the acquisition on a request from Qualcomm. According to Guillermo Christensen, a partner at the law firm Brown Rudnick and a specialist in CFIUS-related transactions, it is unusual for the CFIUS to get involved in a transaction that has yet to be agreed to by both parties. The pile-up of deals reflects scrutiny of technology acquisitions going back to the Obama administration, which warned before it left office that China's push to develop its domestic semiconductor technology posed a risk to USA security. The department pointed to the Chinese company Huawei Technologies as a potential threat; Huawei has a growing 5G patent portfolio and could pave the way for Chinese government control over the sector, it claimed.
In the letter, deputy investment security secretary Aimen Mir indicated that CFIUS believe that deal would put U.S. security in jeopardy.More news: Brazil football player Neymar leaves hospital to spend first phase of recovery
Now, with Qualcomm using the CFIUS investigation as reason to push back the shareholder vote on the acquisition until at least April, Broadcom is launching its own charm offensive and pledging to pour money into the U.S. research and education fields with its $1.5bn fund promise. But according to Recode, the Trump administration isn't sure that an Asian buyer should own a big US tech company. Currently, Broadcom is part of Broadcom Limited located in Singapore. The deal included a sweetener, an $8 billion termination fee that Broadcom would pay should Qualcomm accept the takeover but then regulators disapproved it. Qualcomm's board has rejected the offer, and a few days ago it urged shareholders to reelect its members at the annual shareholder meeting that had been scheduled for March 6.
The main stated reason for this don't seem to be any assumption that Singapore-based Broadcom would set about pillaging USA state secrets the moment it got its hands on Qualcomm.
A key concern is that China will take advantage of the proposed merger to steer the development of 5G technologies in its favor, the Treasury Department said in a letter to Qualcomm on Monday. The company also accused Qualcomm of orchestrating the probe in order to avoid the takeover.