Why CFIUS negotiate on Broadcom?
To obtain Qualcomm, Broadcom vowed to keep the United States on the cutting edge of developing 5G mobile technology. Its recent effort to reduce the Trump administration’s national security concerns about its hostile $117 billion takeover bid.
According to the chip maker, we will not only maintain Qualcomm’s current spending on R&D, but it would increase that amount. It added that it would create a $1.5 billion investment fund to train American engineers.
The Committee on Foreign Investment in the United States (CFIUS) delayed an investor meeting that had threatened to hand Broadcom control of the Qualcomm board and, among other things.
Trump administration block Chinese deals
The Trump administration already block several Chinese deals, due to national security concerns. While, Broadcom is not Chinese. The company legally headquartered in Singapore and plans to relocate to the United States.
The panel’s intervention puts Broadcom’s offered in peril similarly as the company appeared likely to claim seats on Qualcomm’s board. Qualcomm has argued and CFIUs appear inclined to trust that Broadcom’s winning most director seats would successfully put Qualcomm under its opponent’s control.
CFIUS sent a letter to both companies, which says that the government worried about cost cuts that Broadcom may carry out at Qualcomm. Also describes Broadcom’s approach to acquisitions as like private value, shorthand for reducing research spending and laying off workers to support profitability.
While, Broadcom has a proven track record of managing R&D for maximum impact and investing in core franchises.
In its CFIUS statement, Broadcom argued that it was American in every way but legally, highlighting that the businesses it has acquired descended from companies like Hewlett-Packard and AT&T.