Published: Thu, March 08, 2018
Global | By Enrique Rogers

Broadcom pledges $1.5 billion fund to salvage Qualcomm deal

Broadcom pledges $1.5 billion fund to salvage Qualcomm deal

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. Some relate to Broadcom's relationships with third party foreign entities.

Qualcomm shareholders were set to vote on whether to hand control of the San Diego cellular technology company to Broadcom on Tuesday morning. But it now appears willing to continue to pursue its bid for Qualcomm through the CFIUS review, said Bernstein Research Analyst Stacy Rasgon in a research note.

Qualcomm, with its Snapdragon processors, is the world's biggest maker of mobile chips and an attractive target for Broadcom. "Entrusting this effort to a failing Qualcomm management who lacks the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America's long-term interests".

Broadcom notes that it is in the process of moving its official headquarters from Singapore to the U.S., in part to assuage any worries over national security threats.

Broadcom has a message for U.S. regulators: We'll make 5G technology a priority and invest in America if you let our bid for Qualcomm go through.

Assuming its aim was to scupper Broadcom's hostile takeover, the Qualcomm board seems to have played a blinder in getting the CFIUS involved.

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"There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development", Broadcom said in a statement.

On Wednesday, Broadcom tried to assure regulators that it is emphasizing investments in research and development.

An investigation by the CFIUS into a deal that has been proposed, but not yet completed, is highly unusual, and underscores the US' concerns about maintaining its dominance in semiconductors in the face of advances by China.

Broadcom said it's cooperating with the review by CFIUS.

Broadcom, which makes chips for everything from set-top boxes to data centers, on Wednesday vowed to make the USA a global leader in 5G, a next-generation cellular technology that's poised to boost wireless speeds, coverage and the ability to handle an ever more diverse deployment of connected devices.

Qualcomm's shares slipped 41 cents to $64.33, while Broadcom's were down $1.46 at $249.41.

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