Back in 2015, chipmaker Avago Technologies acquired Broadcom for $37 billion, with the ensuing entity — Broadcom Limited — incorporated in Singapore. The company is co-headquartered in Singapore and San Diego, but the chipmaker has now announced that it will move its corporate headquarters back to the U.S. before April 3 to avoid a potential review by the Committee on Foreign Investment in the United States (CFIUS).
The CFIUS stated in a letter last week that it would review Broadcom's $117 billion Qualcomm takeover bid for national security risks, and by redomiciling to the U.S., Broadcom is looking to avoid that.
The move comes as U.S. lawmakers are wary of an Asian company taking over Qualcomm's and its vast trove of patents. For its part, Broadcom's plans to move its headquarters back to the U.S. aren't new — it announced last November that it would do so following its acquisition of Brocade Networks, which was cleared by the CFIUS.
By moving back to the U.S., Broadcom is looking to allay fears of a foreign entity seizing control of Qualcomm. Even if the deal with Qualcomm were to fall through, Broadcom has to redomicile to the U.S. as part of its Brocade acquisition.
The company has mentioned that it will complete redomiciliation by April 3. That date is interesting as it falls two days before Qualcomm's annual shareholder meeting, which could see six Broadcom-nominated directors added to Qualcomm's 11-member board. For now, it remains to be seen if Broadcom can avoid the CFIUS review by moving back to the U.S.
Broadcom Redomiciliation Now Expected to be Completed by April 3, 2018
Broadcom is in the final stages of redomiciling to the U.S. and now expects to complete redomiciliation by April 3, 2018. Broadcom's proposal to acquire Qualcomm has always been premised on the completion of Broadcom's previously announced plan to redomicile. In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the U.S., and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance. In short, U.S. national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation.
Broadcom recognizes the essential role the member agencies of CFIUS play in ensuring U.S. national security. Broadcom, which is in all important respects a U.S. company, has been repeatedly approved by CFIUS in its previous acquisitions of U.S. companies and has always engaged productively with CFIUS to ensure U.S. national security is protected. Broadcom believes the CFIUS process is an essential aspect of protecting U.S. national security and it is supportive of current efforts, including those of Senator Cornyn, Representative Pittenger, and many of their colleagues, to enhance the CFIUS process. In addition, as a company incorporated in the U.S., Broadcom looks forward to working directly with the U.S. government as a trusted supplier, and continuing Qualcomm's existing engagements.
Broadcom's plan to redomicile is and has been a matter of public record since last November and has been addressed multiple times in recent months. This plan was first announced in the White House when Hock Tan, Broadcom's President and Chief Executive Officer, had the honor to announce the plan alongside President Trump in the Oval Office on November 2, 2017. Furthermore, CFIUS reviewed and cleared Broadcom's acquisition of Brocade, which closed on November 17, 2017. As part of the clearance agreement, Broadcom agreed with CFIUS to redomicile to the U.S. The details are included as part of Broadcom's 10-K "Risk Factors" and are also outlined in the Proxy Statement for Broadcom's Special Stockholder Meeting. Given Broadcom's public disclosures about the redomiciliation process since last November, as well as its direct communications to CFIUS, Broadcom has been fully transparent with CFIUS about the redomiciliation process, and believes it is in full compliance with the March 4 Interim Order.
Harish Jonnalagadda is a Senior Editor overseeing Asia at Android Central. He leads the site's coverage of Chinese phone brands, contributing to reviews, features, and buying guides. He also writes about storage servers, audio products, and the semiconductor industry. Contact him on Twitter at @chunkynerd.
Another maneuver from Broadcom to acquire Qualcomm. If they are able to acquire Qualcomm they'd move right back offshore.
Probably. Hopefully Qualcomm doesn't give in and rejects to stay as an American company.
Is Broadcom really worth that much more than Qualcomm? Why wouldn't Qualcomm just try to buy Broadcom? They look to be similar in value to one another. Would innovation really be reduced under leadership Broadcom? Would we not get updated Snapdragon processors every year under Broadcom? Can someone enlighten me on this?
Broadcom are worth more than Qualcomm, so Qualcomm probably couldn't raise the capital. It's easy to think of Qualcomm as bigger because they're more consumer facing (though still not very consumer facing in the real world, outside our little bubble) but if you look at pretty much any electronic device it's likely to have some broadcom silicon or at least something they own the patent for inside it somewhere.
I couldn't find anything online that was definitive in saying that Broadcom was worth more than Qualcomm. What benefit would Broadcom have in buying Qualcomm? And if Qualcomm didn't want to be taken over by Broadcom couldn't they just go private vs being a public company? If I recall, the computer company Dell was private then went public then private then public again. It's probably more complicated.
My quick Googl shows Qualcomm valued at around $93 billion and broadcom at around$108 billion... I'm not a business guy, buy the main advantages I see are that it would eliminate a competitor in some areas and open up others that broadcom isn't currently in through patents and technology. Plus Qualcomm is a profitable company, so a good investment. Again, not a business guy, but you can't just "make" a company private. Qualcomm, or an individual or group, would need to buy out the existing shareholders... What's more, around 99% of the shareholders won't care about Qualcomm or its customers and would just sell their shares to the highest bidder... Although there may be a mechanism in place for a company to just give it's holders the current market value of their shares and call it quits, I don't know. That's all hostile stuff anyway, they're not at that point... Yet.
I wonder how much Qualcomm would be worth if Verizon totally abandoned CDMA and switched to GSM... Just think about that for a second -- Samsung would then probably use it's own processor in all their Galaxy and Note devices in the U.S. There are also a couple of other ARM processors available from Mediatek and I believe Huawei. I really think Qualcomm's management has dropped the ball holding onto it's legacy royalty business... I think 5G is highly overrated unless Mobile companies can solve the last mile problem as I don't think America is going to be all that welcoming to big honking 5g transmitters every block or less....
I'm pretty sure Qualcomm holds a lot of patents on data connections with LTE so even when CDMA goes away Qualcomm is sitting in a pretty good position. I think Qualcomm also has a lot of patents relating to 5G, more than any other player right now so Qualcomm's value will go up in the next 4 years or so.
Why do they have so much hard on for Qualcomm?
Get the best of Android Central in in your inbox, every day!
Thank you for signing up to Android Central. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.