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Exclusive: U.S. has ordered Broadcom to give notice of steps to redomicile - sources


By Greg Roumeliotis

(Reuters) - A U.S. national security panel has ordered Singapore-based chipmaker to provide it with five business days' notice before taking any action toward redomiciling to the United States, three people familiar with the matter said on Friday.

The previously undisclosed requirement shows that the in the (CFIUS), which reviews foreign acquisitions of U.S. companies for potential national security risks, is aware that its jurisdiction could be contested if redomiciles to the

The panel on Sunday ordered San Diego-based Inc to postpone its shareholder meeting by 30 days so it could investigate Broadcom's $117 billion hostile bid for

Lawyers that specialize in advising companies on CFIUS matters have been debating this week whether Broadcom's bid would be subject to a CFIUS review once it redomiciles.

"It is not entirely clear how establishing a U.S. domicile would affect CFIUS' view of its jurisdiction over the proposed transaction," Kirkland & Ellis LLP, a U.S. firm not involved in the matter, wrote in a note to clients on Friday.

"CFIUS' determination as to whether an entity is considered 'foreign' is nuanced and not prescriptive, and encompasses considerations that include a facts and circumstances assessment of ownership and formal and informal mechanisms of control," the Kirkland lawyers wrote.

said on Friday it expected to complete its move to the by May 6. It disclosed it had petitioned a on March 9 to order the convening of a special shareholder meeting to approve the redomiciliation. This meeting will be held on March 23, the company said. The will then have to greenlight the redomiciliation.

"We are aware of the terms in the (CFIUS) order and are in full compliance," a Broadcom said by email when asked whether the company had given CFIUS the required five-day notice on action to redomicile.

The anonymous sources asked not to be identified because details of CFIUS' order to Broadcom and are classified. Qualcomm and a for the U.S. Treasury, which chairs CFIUS, declined to comment.

CFIUS in its order on Sunday also instructed Qualcomm not to take any action that could lead to a deal with Broadcom during the panel's review, according to the sources. Broadcom has nominated six directors for election to Qualcomm's 11-member board as a way to force negotiations between the two companies.

CFIUS, an inter-agency panel led by the U.S. Treasury, rarely reviews mergers before a deal has been clinched. The review of Broadcom's bid illustrates the U.S. government's expanding focus on the competitiveness of the national industry as advances.

The is concerned that Chinese companies, including the and Technologies Co Ltd [HWT.UL], would take advantage of any openings to take the lead in the next generation known as 5G.

"As a U.S. corporation, our future acquisitions in the United States would not be subject to certain regulatory processes required for acquisitions by foreign corporations," Broadcom said in a regulatory filing on Friday.

(Reporting by in New York; Additional reporting by in Washington, D.C.; Editing by Richard Chang)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, March 10 2018. 04:14 IST