Broadcom is not expected to walk away from the deal this month, according to people familiar with the matter. Instead, it will attempt to answer any questions the government has about the deal in hopes it can assuage regulators about their concerns.
Broadcom is still optimistic a theoretical deal can get CFIUS approval in the next 28 days, in time for a Qualcomm shareholder vote, the people said. (The CFIUS told Qualcomm Sunday to delay its shareholder vote by 30 days; it had been scheduled for Tuesday.)
"We are fully cooperating with CFIUS, and are absolutely committed to making the combined company a global leader in critical 5G and other technologies," Broadcom said in an e-mailed statement. "There can be no question that an American Broadcom-Qualcomm combination will provide far more resources for investments and development to that end. Entrusting this effort to a failing Qualcomm management who lacks the support of its owners, and that pays out much of its excess cash flow in fines as a result of serial lawbreaking, would not be in America's long-term interests."
Qualcomm declined to comment.
Broadcom's lawyers have also been looking into speeding up efforts to "redomicile," or move its legal business location, to Delaware before the Qualcomm investor vote, said two of the people. That would make Broadcom a U.S. company before Qualcomm shareholders could vote on the deal.
CFIUS reviews don't apply to domestic transactions -- when one U.S.-based company acquires another. Broadcom, currently based in Singapore, filed on Nov. 2 to redomicile.
But the CFIUS letter and interim order probably make Broadcom's redomiciling efforts moot, said Christensen. The U.S. Treasury's reason for involving CFIUS prior to redomiciling is specifically to get ahead of it, he said. The government would have to approve Broadcom's change of headquarters.
Instead, Broadcom may have to shelve this deal and become a U.S. company. Then it would need to make a new offer to shareholders to potentially avoid CFIUS review, Christensen said.
"They could come in with a brand new offer, say 'we're not a foreign buyer,' and go to war with CFIUS on it," Christensen said.
There is a potential silver lining for Broadcom if it walks away from a deal. CFIUS's pre-emptive move to rule on the deal would allow Broadcom to avoid paying an $8 billion break fee it promised to Qualcomm as a sweetener in case regulators blocked an accepted deal. Knowing CFIUS's objections before agreeing to a deal may allow Broadcom to move on if it can't reach an agreement with the government.