A second request has been made by the US Federal Trade Commissions for information on the hostile bid worth $103 billion that was made by chipmaker Broadcom for Qualcomm Inc. This was disclosed by Broadcom in a statement made on Friday and could indicate increased antitrust security. The review by the FTC is part of the process outlined by the Hart-Scott-Rodino Act for the purpose of scrutinizing potential anticompetitive mergers. According to the website of the FTC, the vast majority of the deals that are reviewed by the Department of Justice and the FTC are approved after the first preliminary review.
However, if there is a need to issue a second request, then the companies must provide additional information to the FTC. In its defense against Broadcom, Qualcomm has stated that any deal has to content with a long antitrust review. Broadcom, on the other hand, said that the second request had been anticipated as a usual part of the process of regulatory approval. In a statement, Broadcom said that this indicated it was moving to the second stage of the US antitrust review procedure. Sources that didn’t want to be disclosed said that some deals often warrant a second request from the FTC for information because of their size and complexity.
Therefore, it is entirely possible that a potential acquisition of Qualcomm Inc. by Broadcom could get approval by the FTC. This week, Broadcom said that another review by the FTC regarding its client relationships is not relevant to its operations, has no connection whatsoever with its wireless business and doesn’t affect its proposal of acquiring Qualcomm. It has stated that they are quite confident of signing an agreement and completing the deal within 12 months whereas Qualcomm has asserted that the regulatory approval process worldwide can often take much longer.
This week, the EU antitrust regulators approved a deal that Qualcomm has been working on. It is the acquisition of NXP Semiconductors for $38 billion. Only China has not given its approval for the deal, but sources have disclosed that approval will be granted in the next two weeks. However, the future of the NXP deal still remains uncertain because some shareholders of the company have demanded that Qualcomm raise its offer. As far as Broadcom’s bid for Qualcomm is concerned, the chipmaker has agreed to pay $60 per share as a cash payment and $10 per share of its own for the firm.
Broadcom is also putting added pressure on Qualcomm by outlining 11 nominees for the position of board directors in order to replace its board. A meeting is scheduled for March in which shareholders of Qualcomm Inc. will vote on these directors. The demand for the second request of information by the FTC had been revealed on Friday, but neither Qualcomm nor FTC had chosen to comment on this matter. Broadcom doesn’t seem fazed by the second request and is willing to comply because it wants the acquisition deal to go through at all costs.