Amid 30-day delay on Qualcomm's stockholder vote, Broadcom might have to pull its bid
The U.S. Treasury's Committee on Foreign Investment in the United States (CFIUS) sent a letter to two Broadcom lawyers on Monday, outlining some issues it had with the deal. It also told Qualcomm to put off the stockholder vote by 30-days. That would move the voting back to April 4th.
The issues mentioned in the CFIUS correspondence dealt with Broadcom's habit of paring spending on research, and fears that the deal could result in security risks to the U.S. if Qualcomm's assets are exploited by "third party foreign entities." 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 attorney believes that the letter from the U.S. Treasury spells the end of Broadcom's bid for now.
Broadcom still is moving ahead, and the company believes it can work things out with the CFIUS in time for Qualcomm stockholders to vote for a new Board run by Broadcom. Broadcom is also looking to become a U.S. company registered in business friendly Delaware, before the stockholder vote. Currently, Broadcom is part of Broadcom Limited located in Singapore.