The Committee on Foreign Investment in the United States (CFIUS) has blocked the possibility of a Qualcomm acquisition by Broadcom, reports Politico. CFIUS operates pursuant to section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (FINSA) (section 721) and as implemented by Executive Order 11858, as amended, and regulations at 31 C.F.R. Part 800.
"The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited," according to the order describing the findings of the Committee on Foreign Investment in the United States.
Broadcom has been maneuvering to perform a hostile takeover of Qualcomm offering $121 billion for the company. Notably, in a press release today, Broadcom said it planned to redomicile to the U.S. by April 3, 2018.
Broadcom's proposal to acquire Qualcomm has always been premised on the completion of Broadcom's previously announced plan to redomicile. In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the U.S., and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance. In short, U.S. national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation.
Broadcom has yet to comment on the CFIUS order. Please follow iClarified on Twitter, Facebook, or RSS for updates.
"The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited," according to the order describing the findings of the Committee on Foreign Investment in the United States.
Broadcom has been maneuvering to perform a hostile takeover of Qualcomm offering $121 billion for the company. Notably, in a press release today, Broadcom said it planned to redomicile to the U.S. by April 3, 2018.
Broadcom's proposal to acquire Qualcomm has always been premised on the completion of Broadcom's previously announced plan to redomicile. In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the U.S., and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance. In short, U.S. national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation.
Broadcom has yet to comment on the CFIUS order. Please follow iClarified on Twitter, Facebook, or RSS for updates.