Secret US security panel investigates concerns over Broadcom's bid for Qualcomm

US government fears deal between Broadcom and Qualcomm could threaten national security

A secret US security panel is investigating Broadcom's plans to acquire rival chip maker Broadcom, according to Reuters.

Its sources claim that US officials are examining the the proposed bid for potential national security complications.

They believe that the Committee on Foreign Investment in the United States (CFIUS), a security panel made up of several US agencies, has approached one of the firms to address security concerns.

Specialists from the organisation met with either Broadcom or Qualcomm to probe the merger, but have not revealed when this supposed meeting actually took place.

On Monday, Republican senator John Cornyn called on CFIUS to open its own investigation into ongoing acquisition dealings.

He voiced concerns about the deal, and asked Treasury Secretary Steve Mnuchin to consider the threats. Cornyn wants a review conducted before Qualcomm's shareholders hold a vote on March 6th.

Reuters said it gained access to a letter confirming the ongoing situation. If the the senator's plans go ahead, then a deal between Broadcom and Qualcomm could be derailed completely.

Reviews conducted by CFIUS are rare, so the fact that the security body is probing Broadcom's deal shows that officials are clearly worried. In particular, they have concerns about Broadcom's plans to move its headquarters to the US.

It is reported that the panel is worried that Broadcom could resort to a hostile takeover as a result of continued resistance from Qualcomm.

Broadcom wants to fill the Qualcomm board with six of its own nominees in forthcoming elections, a move intended to see which way shareholders are swinging, as well as helping sway Qualcomm's board into supporting Broadcom's bid if it is successful. Qualcomm currently has eleven board directors.

In the letter, Cornyn wrote: "I urge CFIUS to promptly review Broadcom's proposed acquisition of control of Qualcomm's board, and to act prior to the March 6 Qualcomm meeting to address any national security concerns that may be identified."

Yesterday, Qualcomm chairman Paul Jacobs penned a letter to Broadcom slamming its current offer.

"While we have made progress on regulatory and other deal certainty issues, you have continued to insist that your current $79 per share proposal is your best and final proposal," he said.

"For the reasons we have stated publicly to our stockholders, and privately to you in our meetings, the Qualcomm board continues to be of the unanimous belief that each of your proposals, including your prior $82 per share proposal, materially undervalues Qualcomm."