Broadcom (NASDAQ:BRCM) on Wednesday announced it would spend $1.5 billion to make the U.S. the global leader in 5G, a digital technology that enables virtual reality and self-driving vehicles, a move to ease the U.S. Treasury’s concerns about Broadcom's bid to acquire Qualcomm (NASDAQ:QCOM).
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Broadcom’s move comes as the U.S. government stepped in at the 11th hour to delay, or maybe even stop, Broadcom’s bid to acquire Qualcomm.
Early Sunday, Broadcom announced that the Committee on Foreign Investment in the U.S. (CFIUS) said it would review Broadcom’s proposal.
Then, on Tuesday, the behind-the-scenes chess moves were revealed when Qualcomm provided a copy of a letter to the companies’ lawyers from the U.S. Treasury Department.
“CFIUS has identified potential national security concerns that warrant a full investigation of the proposed transaction,” the letter said.
A key area of focus is the risk of the U.S. losing ground to China on developing 5G wireless technology.
The committee stepped in just before a Qualcomm shareholder meeting in which it was expected that shareholders would vote in a board more amenable to Broadcom’s wishes.
CFIUS is overseen by the Treasury Department, which can recommend that the U.S. president block a deal.
Qualcomm rescheduled its shareholder meeting for April 5.