Broadcom Pledges $1.5 Billion U.S. Investment to Ease Regulatory Scrutiny -- Update
By Imani Moise
In a move to ease regulatory concerns, Broadcom Ltd. said Wednesday that it is committed to making the U.S. a leader in 5G and plans to invest $1.5 billion in training American engineers.
The announcement comes after the U.S. Treasury, which chairs the Committee on Foreign Investment in the U.S., sent a letter scrutinizing Singapore-based Broadcom's $117 billion hostile takeover of California-based Qualcomm Inc.
The committee said that Qualcomm's leading position in 5G technology is good for national security and expressed concerns over Broadcom's ties to foreign organizations.
One of the fears from CFIUS was that a merger would result in reduced investment in research and development, clearing the way for Chinese competitors to gain influence over the future of 5G technology.
Broadcom, which previously announced plans to relocate to the U.S., said Wednesday that it would maintain R&D resources at Qualcomm and focus spending on technologies that are critical to the country. Broadcom expects to complete its move in May.
CFIUS rarely weighs in publicly on a deal it is scrutinizing, and the panel debated last week whether it even had the jurisdiction to intervene in the Broadcom-Qualcomm battle, since an agreed deal hadn't yet been reached.
But over the weekend the panel, which can recommend the president block deals, ordered Qualcomm to delay its annual shareholder meeting by 30 days so it would give CFIUS time to review the takeover bid.
Broadcom said it would cooperate with the CFIUS review. Qualcomm agreed to delay its annual meeting until April 5 so CFIUS can pursue its investigation.
Though the early review was unprecedented, heavy regulatory scrutiny was expected as the combination of Broadcom and Qualcomm would create one of the world's largest semiconductor businesses. The two companies inched closer to a deal late last month when Qualcomm, previously reluctant to negotiate, asked Broadcom to set up a meeting to discuss price.
Write to Imani Moise at email@example.com
(END) Dow Jones Newswires
March 07, 2018 09:08 ET (14:08 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.