Broadcom Inc. (NASDAQ: AVGO) in July announced a $19-billion acquisition of CA Technologies (NASDAQ: CA) (formerly known as Computer Associates Technologies) in an attempt to build a leading infrastructure technology company.
Earlier this year, President Trump blocked Broadcom's acquisition attempt of Qualcomm Inc (NASDAQ: QCOM), expressing the national security concerns surrounding 5G networking and the company’s ties to China. On Wednesday, Axios reported Sen. Rand Paul called for a federal national security review of the CA acquisition.
Following Paul’s statement, Broadcom released a statement explaining both the validity of the acquisition, as well as the announcement of a fraudulent memo that allegedly circulated around Congress.
“We have learned that a fraudulent memo purported to be signed by the U.S. Department of Defense ("DoD") is circulating among Senators and members of Congress referencing the possible need for review of Broadcom's acquisition of CA Technologies by the Committee on Foreign Investment in the United States ("CFIUS"). We have been informed by DoD officials that this memo is in fact a forged document.”
Why It’s Important
According to the statement, there's no basis for legal review of the pending transaction since both companies are based in the U.S.
“We have received HSR clearance and the approval of CA shareholders, and we have a clear path to completing the transaction in the fourth calendar quarter of 2018.”
Shortly after Broadcom released its statement, Rand Paul's chief strategist tweeted, "No one here has seen a memo or basing the need for CFIUS review on anything other than the obvious national security implications of this merger. Broadcom had national security issues in a CFIUS review just earlier this year and this review should be undertaken immediately."
Broadcom and CA shares traded lower Wednesday, both down about 2.5 percent at time of publication.
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