Qualcomm shareholders' meeting of March 6, 2018 was known as the history of the largest acquisition of Qualcomm Technologies Casey pass the case of the positive confrontation.But just in the day before the holding of Qualcomm shareholders, in the United States on the morning of March 5 burst Qualcomm actively surveyed by the U.S. Foreign Investment Commission (CFIUS), CFIUS therefore ordered the shareholders to be delayed for 1 month pending investigation, triggering an uproar in the market.
Broadcom also said it was surprised by Qualcomm's acceptance of CFIUS just moments before the shareholders' meeting. Qualcomm responded to the refute that Broadcom should not be surprised because Broadcom had already filed two written filings with CFIUS several weeks earlier.
This mergers and acquisitions case attention not only because of the scale, but also because the merger from November 2017 until now, both sides offensive and defensive plot along the way, almost can be called the most classic than the United States in the history of mergers and acquisitions The Bar Barbarian at the Gate, whether it is the Golden Parachute or the Poison Pill strategy, can be seen in the offensive and defensive takeovers between Qualcomm and Broadcom.
However, the previous few offensive and defensive down, Qualcomm and Broadcom each other, but also did not really change the situation, this case of mergers and acquisitions has in fact already stalled, only the only way is Qualcomm shareholders meeting was positive. At Qualcomm's shareholders' meeting on March 6, Broadcom plans to nominate six board members, such as Broadcom, which holds a majority of 11 seats in Qualcomm's board of directors and takes the lead in the acquisition.
It is noteworthy that although in early March, Qualcomm released news that as one of its top 30 shareholders Parnassus Endeavor Fund, has decided to vote for Qualcomm's nomination of director candidates to support Qualcomm's existing company to send However, if the time is estimated, Qualcomm announced the news at the same time, Qualcomm has actually begun at the same time also started to the United States CFIUS willingness to accept the intention of the survey.
In the past few years, most impressions of CFIUS have been at the meritorious role of Chinese companies in the acquisition of U.S. companies. The merger of many Chinese companies, from Huawei to Ziguang, to the acquisition of U.S. companies ended in a CFIUS intervention This time, CFIUS 's arrow points to Broadcom, a Singapore registered company in the United States, whose assets, people and operations are major companies.
In fact, Broadcom officially submitted to Qualcomm in November 2017 before the proposed offer, a Broadcom CEO Hock Tan meeting with Trump occasions, Hock Tan has said on the spot, Broadcom headquarters will be moved from the current Singapore to the United States, In response to Trump's U.S. priority.
However, Broadcom headquarters moved back to the United States will be in May 2018, before that Broadcom is not a U.S. company, the acquisition of Qualcomm's proposal will have to be CFIUS's review.
The CFIUS received Qualcomm said it was willing to accept the investigation, asked Qualcomm to be scheduled for March 6, the shareholders meeting to be delayed by one month, the next month's survey will focus on rival Broadcom, this investigation will be up to 1420 Whether the $ 800 million acquisition of a high price would threaten the national security of the United States.
This move can be described as abnormal, and even the news that as early as the two companies began to discuss the acquisition of the joint venture, the United States Foreign Investment Committee has been concerned about and intervened by the sudden surge in the incident of politics High-pressure air also began to spread around, for Broadcom's next move is estimated to be more rigorous review.
Broadcom was extremely dissatisfied with this. The company subsequently issued a public statement on the morning of March 5, U.S. time, accusing Qualcomm of acting as meaningless resistance, and Broadcom has already agreed with the U.S. government's request to move headquarters back to the United States and take effect. The day will be in May, when the Foreign Investment Commission of the United States leaves no room for beating in the merger.
CFIUS is composed of representatives from the Ministry of Finance and the Ministry of Justice. It may have long been expected that government agencies will intervene in the acquisition, so some analysts said early on that the acquisition is not optimistic, that even if Qualcomm shareholders agreed to the acquisition offer , The case may still be banned for antitrust reasons.
In any case, the involvement of the U.S. Foreign Investment Advisory Committee did secure a one-month grace period for Qualcomm. During this month, Qualcomm had more time to implement the strategy of anti-merger tactics. After all, from the end of 2017, Broadcom’s moves continued to emerge. The blitzkrieg actually made Qualcomm a bit overwhelmed.
In order to protect their own properties against malicious acquisitions, Qualcomm can be said to have done a variety of moves, in addition to early announcement at the end of 2017 the current 11 board of directors to continue running for election, and candidates against Broadcom, but also by raising the quote , At the same time, they also jointly announced the boycott of Broadcom’s M&A operations with various partners. In addition, they also formulated huge compensation fees, planned stock repurchases to increase share prices, and significantly increased the performance targets for the financial year 2019. They hope to make Bo’s notifications more difficult. Retreat, however, Broadcom headed big boss Hock Tan is not a good mess with the role, in addition to taking advantage of profit, along with the momentum of Qualcomm to increase the price, but also increase the amount of break-up fees that must be paid to Qualcomm after the merger and acquisition case fails, I hope to take this Can impress Qualcomm shareholders.
Hock Tan's practice has also proved quite effective, part of Qualcomm shareholders defeat to support Broadcom's party.
But then in order to counterattack Broadcom, Qualcomm increased the purchase price of NXP, but this move Broadcom extremely dissatisfied, cut purchase price 4%, hoping to pass Qualcomm shareholders stationed in Broadcom pressure, forcing Qualcomm to fan until the end, Qualcomm The opening said that if Broadcom proposed 90 US dollars per share, the overall 160 billion acquisition price, willing to consult with Broadcom on mergers and acquisitions, Qualcomm's move seems to appease the dissatisfaction of existing shareholders, but in fact it has begun to brew Finally, CFIUS shot intervention big move.
In November last year, Broadcom first proposed 130 billion US dollars acquisition of Qualcomm's plan, and the deal once completed, will become the largest in the history of a semiconductor transaction case, the integration of the new company will also become Intel and Samsung After the world's third largest semiconductor company.
From a deeper perspective, the two-way mergers and acquisitions also revealed some changes that are taking place in the semiconductor industry, that is, with the advent of more and more electronic devices, the demand for semiconductor chips will be higher and higher , The global chip sales exceeded $ 410 billion last year alone. With the increasing demand for computing power, fewer and fewer companies are able to produce high-performance chips and Broadcom exits the baseband market Inadequate access in areas such as cell phones, in-vehicle communications and IoT has also created an obstacle to the long-term growth of the company.
On the other hand, Hock Tan is very good at splitting up the profit-making M & A business units for profit. Considering that Qualcomm has a large number of departments, but the real profit is small. However, its technology base and patent library are quite profound. Spin-off sale will certainly be able to get a lot of benefits.And the division of the patent and business part, but also a considerable degree of reduction monopoly disputes.
More noteworthy is that Bertone strong mergers and acquisitions behind, whether it also represents the interests of customers, including Apple, which is the focus of continuous observation of the outside world.Although this Qualcomm at the last minute move out of CFIUS as a rescuer, hoping to fight for time More space, but CFIUS in the investigation process, will also be on the actual market competition and operating conditions, including customers, competitors, including the relationship between people, therefore, whether Apple or other businesses on this merger attitude It may also be a factor that affects the CFIUS findings.
A month's time is actually not long, Qualcomm has been very difficult to have a new move to deal with Broadcom, if move out of the U.S. government this move does not work, then the fate of Qualcomm may also doomed to change the last key is that Qualcomm to the United States In terms of the importance of how high, after all, the baseband technology can be said that the military strategist, the relevant patent can be said that the national strategic level of assets, this is not a simple commercial mergers and acquisitions can be traded things.
On the other hand, even if Broadcom is not able to complete the acquisition due to regulatory constraints, it is not impossible for Broadcom to resume its headquarters after it relocated its headquarters to the United States, although this may take a year or more Of the time.But one thing we have to think about is that if a year later, Broadcom comeback to buy Qualcomm, when the price will be higher than it is now or low? Delay Broadcom acquisition, the Qualcomm, will be a good thing or a bad thing ?
This month for Qualcomm, may be the time for space buffer, but in the eyes of some industry people, but also think this month but can let Broadcom calm down to think about opportunities, after all, in the high pass for some time Counterattack, whether it is to raise the cost of repatriation programs, or to increase the price of the acquisition of NXP, let Broadcom acquisition of Qualcomm increased risk for Broadcom, the same time in exchange for space, even if Broadcom in the Qualcomm shareholders meeting Successfully won more than half of the board seats, or because of other regulatory reasons, and can not complete the acquisition, Broadcom, are not necessarily a bad thing.Because after 1 year, the value of Qualcomm will be higher than it is now? Broadcom acquisition of Qualcomm case to this point , This month may be an unexpected turn, but it may also be a key turning point.