Status: Clearance; Mitigation
Acquirer: Broadcom Ltd. (Singapore)
Acquired: Brocade Communications Systems, Inc. (US)
Value: Approx. US$5.9 Billion
Industry: Telecommunications; Network and Data Solutions; Semiconductors
UPDATE: On November 17, 2017, Broadcom Ltd. completed its previously announced acquisition of the Brocade Communications Systems, Inc. (See Brocade Communications Systems, Inc., Form 8-K, Nov. 17, 2017, SEC Filing; see also Broadcom Press Release, Broadcom Completes Acquisition of Brocade Communications Systems, Nov. 17, 2017.) The transaction was conditioned on clearance from CFIUS. (See Agreement and Plan of Merger, Sections 7.01(c), 8.01(g), in Brocade Communications Systems Form 8-K, Ex-2.1, Nov. 2, 2016, SEC Filing.)
The parties’ notification of the transaction to CFIUS had previously been withdrawn and refiled twice; however, CFIUS agreed to allow the second refiling on October 2, 2017, “to proceed directly to a 45-day investigation period, thereby shortening the customary 75-day CFIUS review period.” (Brocade Communications Systems, Inc., Form 8-K, Oct. 3, 2017, SEC Filing.) Forty-five days from October 2, 2017 would fall on November 16, 2017.
In a recently filed statement with the SEC, Broadcom stated that “CFIUS reviewed and cleared Broadcom’s acquisition of Brocade,” but “[a]s part of the clearance agreement, Broadcom agreed with CFIUS to redomicile to the U.S.” (See Broadcom Ltd. Form 425, Mar. 12, 2018, SEC Filing.)
Posted on October 3, 2017
Status: Withdrawn and Refiled (2nd time)
On October 2, 2017, Broadcom reported in a securities filing, in relation to its proposed acquisition of Brocade Communications Systems, Inc., a California network and data storage solutions company, that “following continued discussions with the Committee on Foreign Investment in the United States (“CFIUS”), the parties withdrew and re-filed their joint voluntary notice to CFIUS under the Defense Production Act of 1950, as amended, a second time to provide CFIUS more time to review and discuss the proposed Merger. CFIUS has agreed to proceed directly to a 45-day investigation period, which will commence on October 4, 2017 and will conclude no later than November 17, 2017.” (Broadcom Form 8-K, Oct. 3, 2017, SEC Filing.) Broadcom reported that, “[t]o allow for the additional review period,” the parties “agreed to refrain from exercising their right to terminate the Merger Agreement for failure to close the proposed Merger by the November 1, 2017 end date under the Merger Agreement …” (Id.) The filing also reported that “Broadcom and Brocade have been and will continue to be actively engaged with CFIUS, remain fully committed to the Merger and will continue to work diligently and cooperatively to close the Merger.” (Id.)
The parties agreed to refrain from exercising the end date requirement under the agreement until “the earlier of (x) the date that is four business days after the 45th day after CFIUS accepts the parties’ revised joint voluntary notice and (y) November 30, 2017.” (Id.) “Broadcom and Brocade now anticipate the Merger to be completed by November 30, 2017, subject to clearance from CFIUS.” (Id.)
Posted on July 18, 2017
Status: Withdraw and Refile
As previously reported, in December 2016 Brocade Communications Systems, Inc. and Broadcom Limited prefiled a draft notice to CFIUS concerning the proposed merger agreement, executed on November 2, 2016, whereby Brocade Communications would become an indirect subsidiary of Broadcom. (See Brocade Communications Systems Form 8-K, July 18, 2017, SEC Filing.) “On July 17, 2017, following discussions with the Committee on Foreign Investment in the United States (“CFIUS”), the parties agreed to withdraw and re-file their joint voluntary notice to CFIUS under the Defense Production Act of 1950, as amended, to allow more time for review and discussion with CFIUS in connection with the proposed acquisition. Once CFIUS accepts the joint voluntary notice, it will commence a new 30-day review period, which may be followed by a 45-day investigation period.” (Id.) Brocade Communications Systems “presently expects the proposed acquisition to be completed during its fourth fiscal quarter ending October 28, 2017.” (Id.)
Posted December 20, 2016
Status: New Filing
Brocade Communications Systems reported that the parties “pre-filed a joint voluntary notice to CFIUS on December 16, 2016.” (Brocade Communications Systems, Schedule 14A, Dec. 20, 2016, SEC Filing.)
Posted November 17, 2016
Status: Upcoming/New Filing
On November 2, 2016, Broadcom Limited, a Singapore company co-headquartered in San Jose, California, and Brocade Communications Systems, Inc., a California network and data storage solutions company, announced that they entered into a definitive merger agreement under which Broadcom will acquire Brocade Communications Systems, which will become a wholly owned subsidiary of Broadcom, for approximately US$5.5 billion, plus approximately $0.4 billion of debt. (See Broadcom Press Release, Nov. 2, 2016; Brocade Communications Systems Form 8-K, Nov. 2, 2016, SEC Filing.) The merger agreement is conditioned on clearance from the Committee on Foreign Investment in the United States (CFIUS). (See Agreement and Plan of Merger, Sections 7.01(c), 8.01(g), in Brocade Communications Systems Form 8-K, Ex-2.1, Nov. 2, 2016, SEC Filing.) According to Broadcom’s press release, Hock Tan, President and Chief Executive Officer of Broadcom, stated that the acquisition of Brocade Communications Systems “enhances Broadcom’s position as one of the leading providers of enterprise storage connectivity solutions to OEM customers.” (See Broadcom Press Release, Nov. 2, 2016.)