The Federal Trade Commission late Friday made a second request for information on semiconductor firm Broadcom Ltd.'s (AVGO) - Get Report $130 billion hostile bid for Qualcomm Inc (QCOM) - Get Report , a move that puts a spotlight on the level of antitrust scrutiny the potential deal would face.
In a statement, Broadcom said the request was expected as a normal part of the regulatory approval process, adding that second requests from the FTC are common in similar transactions. However, the FTC notes that most deals reviewed by the agency are approved after a first review.
With a second request for information, Broadcom has to provide more information to the FTC about the potential deal. The request comes as Qualcomm, which has rejected the offer, has complained that any combination between it and Broadcom would face a lengthy, drawn-out review.
The review also comes as Broadcom together with its partner, Silver Lake Partners, is employing an activist strategy of seeking to take over the entire 11-person Qualcomm board as part of an effort to close its acquisition of the chipmaker. On Dec. 22, Qualcomm announced, not surprisingly, that it was rejecting Broadcom's director slate.
The contest is still moving forward and set to take place at Qualcomm's 2018 annual meeting, which likely will take place in March or April.
There was never any expectation that Qualcomm would accept Broadcom's board candidates since it had moved in November to reject the chipmaker's hostile bid. If elected, the primary responsibility of the dissident slate of directors would be to agree to sell the business to Broadcom.
In addition, Qualcomm is in the midst of completing a $47 billion acquisition of NXP Semiconductors NV (NXPI) - Get Report . That acquisition effort is being complicated by Elliott Management's Paul Singer, an activist investor, who is seeking to have Qualcomm pay more than its agreed upon $110 a share to buy NXP. Singer sought to bolster those efforts by issuing a 19-page UBS report it had commissioned suggesting that the chipmaker was worth between $120 and $150 a share on a standalone basis.
Jim Cramer and the AAP team hold positions in Broadcom and NXP Semiconductors for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AVGO or NXPI? Learn more now.
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