Broadcom Under Investigation by FTC

Release time：2018-01-18
author：Ameya360
source：Dylan McGrath
reading：1163

　　Broadcom said an ongoing investigation by the U.S. Federal Trade Commission into whether it engaged in anti-competitive tactics in negotiations and agreements with customers is immaterial to its business.

　　The FTC probe, first reported by the Wall Street Journal Wednesday (Jan. 17), has been underway for several months and has recently gained momentum with the issuance of multiple subpoenas, according to the report.

　　“This FTC review is immaterial to our business, does not relate to wireless and has no impact on our proposal to acquire Qualcomm,” a Broadcom spokesman said in a statement emailed Wednesday.

　　Broadcom is currently engaged in a $105 billion hostile takeover attempt of rival chip maker Qualcomm. On Tuesday, Qualcomm sent a letter to stockholders repeating its board's assertion that the takeover proposal undervalues Qualcomm and urging them to vote for its slate of directors at the March 6 stockholder meeting.

　　According to the Wall Street Journal report, which cites anonymous sources, the FTC probe focuses on a change made to Broadcom customer contracts that calls for customers to buy a certain percentage of Broadcom's output for a given product, rather than a set number. This structure could be problematic, raising concerns about other customers' access to the products, according to the report.

　　The FTC and other global regulatory bodies have in recent months moved more aggressively to cut the use of alleged anti-competitive tactics in the semiconductor industry. Last year, the FTC sued Qualcomm, saying the San Diego-based chip vendor engaged in unlawful tactics to maintain a monopoly on cellular chips.

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Broadcom's stock price tumbled Thursday after the chipmaker announced its latest acquisition bid, an $18.9 billion offer to buy an established vendor in the seemingly unrelated field of IT management software.Broadcom (San Jose, Calif.) said it signed a definitive agreement to acquire CA Technologies in a cash deal that gives CA Technologies a 20% premium over its closing stock price Wednesday. The deal is expected to close in the fourth quarter, Broadcom said.Broadcom has grown substantially in recent years, largely through acquisition of other chip companies, including the $37 billion merger of Avago and Broadcom in 2015. A $105 billion hostile bid to acquire Qualcomm was blocked earlier this year by U.S. President Donald Trump on national security grounds.But analysts have expressed concern that the acquisition of CA Technologies offers no synergies with Broadcom's existing chip businesses and doesn't align with the company's core strategy. Broadcom's stock price declined by 15% Thursday morning in the wake of the announcement.Tan said Broadcom would continue to strengthen CA Technologies businesses to meet the growing demand for infrastructure software solutions.
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