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Broadcom has moved back to the U.S. from Singapore, which could allow it to circumvent the mighty power of the Committee on Foreign Investment in the United States (CFIUS), which blocked its takeover attempt of Qualcomm last month. The company's co-headquarters in San Jose, California will become the sole headquarters of the redomiciled company:
Broadcom said on Wednesday it had completed its move back to the United States from Singapore, weeks after President Donald Trump blocked its $117 billion offer to buy Qualcomm on national security grounds.
Broadcom, which was a U.S. company until it was bought in 2016 by Singapore's Avago, had announced its plan to redomicile on Nov. 2, days before making its first offer for Qualcomm.
[...] The move to the United States could allow Broadcom to buy U.S. companies without coming under the scrutiny of the Committee on Foreign Investment in the United States (CFIUS), which has the power to stop deals that could harm national security.
Broadcom had already agreed with CFIUS to redomicile as a condition of approval for its acquisition of Brocade Communications. Knowing this, CFIUS still blocked Broadcom's attempt to acquire Qualcomm:
[Mergers and acquisitions (M&A)] bankers see a crafty defence being conducted by Qualcomm here: first innocently just checking if CFIUS approval for the unsolicited bid might still be needed, even as Broadcom proceeded to redomicile, and then lobbying hard.
"There was every likelihood that Broadcom would win the proxy fight," says an M&A banker at a different firm. "But it appears that Qualcomm has turned over the US Defense Department." This banker continues: "Remember, Broadcom does not have an unusual share register with any controlling Chinese shareholders."
The conclusion of many bankers is that Qualcomm raised enough concerns that the bidder might take such an aggressive, private equity-style, cost-cutting approach to the target's research and development budget, that it might let China's Huawei steal a march in developing 5G telecoms technology.
You may recall that Broadcom's letter to Congress following the block mentioned that the company was committed to making the United States the global leader in 5G.
Also at Nasdaq.
Related: U.S. Government Reportedly Wants to Build a 5G Network to Thwart Chinese Spying
(Score: 5, Insightful) by fishybell on Friday April 06 2018, @01:15AM (3 children)
Considering the ease at which companies can change "headquarters," trying to prevent companies from merging based solely on the country of origin of the acquiring company is inherently a losing game.
Say Microsoft for whatever reason decided to buy Qualcomm. The FTC and Trump would have no reason to block such a merger. Microsoft could then just a easily reincorporate in Singapore as Broadcomm did and suddenly all the fears of the "oh noes! it's owned by a foreign company!" crowd are realized.
(Score: 4, Insightful) by Fluffeh on Friday April 06 2018, @04:26AM (1 child)
No, not at all. At that point everyone is quiet and hopes that no-one else notices. This is politics. You don't have to do the right thing - you just can't be seen doing the wrong thing.
(Score: 2) by cmdrklarg on Friday April 06 2018, @05:37PM
Ah yes, the Eleventh Commandment: Thou shalt not get caught.
The world is full of kings and queens who blind your eyes and steal your dreams.
(Score: 1) by pTamok on Friday April 06 2018, @08:30AM
I agree.
The location of the jurisdiction under which the company is incorporated (gains legal personhood) is probably less important than the nationalities and locations of the members of the board, and the nationalities and locations of key staff.
A company can be incorporated in Luxembourg, but operate in the USA; or be incorporated in Delaware and have operations spread all over the globe. Location and staff allegiances count. In this case, from a national security point of view, some of the questions to ask would be:
1) Where are the fabs?
2) What are the actual locations and allegiances of key staff.