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Cotton Backs U.S. Decision to Review Broadcom's Bid to Takeover Qualcomm

'Qualcomm's work is too important to ... let it fall into the hands of a foreign company'

Sen. Tom Cotton
Sen. Tom Cotton / Getty Images
March 5, 2018

Sen. Tom Cotton (R., Ark.) on Monday praised a U.S. government panel's decision to order Qualcomm Inc. to delay its shareholder meeting this week to allow for more time to review Broadcom Ltd.'s takeover bid.

The U.S. Committee on Foreign Investment in the United States (CFIUS) on Sunday decided to delay Qualcomm's upcoming shareholder meeting on Thursday, a highly unusual move by Washington.

The intervention is meant to give the panel more time to review what would be the world's biggest technology-industry takeover ever, the Wall Street Journal reported. Broadcom, a Singapore-based semiconductor company, has proposed a $117 billion bid to takeover Qualcomm, a San Diego-based company whose work includes chip-making and cellular technology.

Cotton said in a statement that Qualcomm's work is "too important" to allow a hostile takeover by a foreign company.

"Qualcomm's work is too important to our national security to let it fall into the hands of a foreign company—and in a hostile takeover no less," Cotton said. "I raised concerns about this proposed takeover to the Treasury Department directly, and I commend the Committee on Foreign Investment in the U.S. for putting it on hold."

Cotton argued that Chinese companies would have an advantage in the future if the U.S. allowed firms from abroad to take over certain American technology companies such as Qualcomm.

"It's hard to see a good reason why we should hand over one of our leading computer-chip makers, and thereby give Chinese companies a leg-up in the race to develop 5G and the next generation of technology," he said. "Better to keep it in American hands and protect American national security."

Qualcomm's shareholder meeting was set to include a vote on whether to replace six of its 11 directors with nominees put forward by Broadcom. But CFIUS—which includes officials from the Defense, Energy, Homeland Security, and Justice departments—is taking more time to review the bid to determine whether a foreign acquisition of Qualcomm constitutes a national security threat.

Qualcomm does sensitive work for the government, the Journal noted, and it is developing next-generation cellular technology.

"The Committee on Foreign Investment in the United States issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days," a Treasury spokesman said in a statement. "This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm."

Qualcomm said it would comply with the order and delay its shareholder meeting at least 30 days.

Broadcom has said that its chief executive, Hock Tan, and most of its senior management are American, and that they plan to relocate the company to the U.S.