A national security panel that can block mergers seen as harmful to U.S. national security has begun looking into Broadcom Ltd's takeover bid of rival QUALCOMM Inc., potentially triggering a review that could threaten the deal, Reuters reported Feb. 27, citing three sources "familiar with the matter."
The Committee on Foreign Investment in the United States, or CFIUS, has contacted at least one of the companies in the proposed merger, one source said. The committee also met in January to discuss the proposed merger, two sources said.
CFIUS is an inter-agency committee that reviews the national security implications of foreign investments in U.S. companies or operations.
Republican Senator John Cornyn on Feb. 26 wrote to Treasury Secretary Steven Mnuchin, who chairs CFIUS, to review Broadcom's bid before a key shareholder vote is held on March 6, according to a letter seen by Reuters.
At the core of CFIUS' concern and partly stated in Cornyn's letter, is the fact that Singapore-based Broadcom failed to strike a deal with Qualcomm and resorted to a hostile takeover by proposing six Broadcom nominees for Qualcomm’s 11-member board.
If the six Broadcom nominees are elected on March 6, the vote would give control of Qualcomm to Broadcom before a CFIUS review or antitrust review is complete, said the Reuters report.
"I urge CFIUS to promptly review Broadcom's proposed acquisition of control of Qualcomm's board, and to act prior to the March 6 Qualcomm meeting to address any national security concerns that may be identified," Cornyn said.
A spokesman for CFIUS declined to comment, while representatives for Cornyn were not immediately available for comment, said Reuters.