The US Federal Trade Commission (FTC) requested more information from Broadcom regarding its plans to acquire Qualcomm, as regulatory scrutiny over the proposed $130 billion deal begins to ramp up.
In a statement, Broadcom said it had received a so-called “Second Request” for additional information regarding the bid, adding the FTC’s move signified the deal “is moving to the next stage of the US antitrust review process”. The FTC typically holds a preliminary review for large-scale mergers, but can extend the review, as it has done in this case, and request more information if it believes there are antitrust issues.
Broadcom added the request “was expected as a normal part of the regulatory approval process”.
After Broadcom complies with the request, the regulator has 30 days to complete its review of the additional information and take action if deemed necessary.
Broadcom launched its bid to acquire Qualcomm in November 2017 for $70 per share, valuing the total deal at $130 billion, but the proposal was swiftly rejected by the latter’s board for undervaluing the company.
The proposed takeover then turned hostile as Broadcom launched an effort to oust Qualcomm’s sitting board and appealed directly to investors to back its bid. Qualcomm hit back by urging shareholders to re-elect its board, while promising new cost reductions as part of a plan to boost profitability and stave off the takeover.
Broadcom added in its statement it remains confident the proposed transaction will close within 12 months of signing a definitive agreement.
Qualcomm, of course, is edging closer to its own takeover of NXP Communications after receiving regulatory approval in South Korea and Europe last week. It is now waiting on approval from China, but is still facing some shareholder opposition.
Broadcom reiterated its own proposal for Qualcomm stands regardless of the outcome of the NXP transaction.
Notably, Broadcom also faced an extended regulatory review process in the US when it acquired network gear maker Brocade Communications in a $5.9 billion deal completed last year.