Broadcom's Takeover of Qualcomm Blocked by the Committee on Foreign Investment in US (CFIUS)

​Last week was quite tumultuous in the M&A space. The most notable event was the CFIUS' denial of Singapore-based Broadcom's acquisition of U.S.-based Qualcomm. Other major events included the bankruptcies of debt-ridden iHeartMedia and Toys ‘R’ Us, a few healthcare-related corporate divestitures, and two technology deals. 

• Last Tuesday, one of the largest technology transactions in history, Broadcom's hostile $117-billion-dollar takeover of Qualcomm, fell through. The Committee on Foreign Investment in the United States (CFIUS) feared that deal involved national security risks if the U.S.-based Qualcomm would fall under the control of an Asian company that is heavily influenced by China.

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• Last Thursday, iHeartMedia (OTCPK: IHRT), the largest US radio company filed for Chapter 11 bankruptcy. The firm is currently organizing a debt agreement with creditors to off-load more than $10 billion of its $20 billion in debt. The company operates over 849 radio stations throughout the United States. According to Thomson Reuters and court documentation, the debt-cutting deal details that current secured debt holders were owed $13 billion in debt and will agree to accept $5.6 billion in new debt and 94% of the equity in the restructured iHeartMedia. The third largest radio station operator, Cumulus Media, operating roughly 445 stations, had filed for Chapter 11 bankruptcy less than four months ago.

• At the beginning of last week, Toys 'R' Us declared its plans for liquidation of all its remaining 740 stores in the U.S. and more than 30,000 employee layoffs after failing to find a buyer or reach restructuring deals after its initial Chapter 11 filing last fall. Debt-laden Toys 'R' Us, one of the first "category killers" in the 1980s and 1990s, had been struggling to compete as consumers moved to e-commerce. It is speculated that Toys ‘R’ Us will find a buyer for its brand name and giraffe mascot.

• Last Friday, Johnson & Johnson (NYSE: JNJ) stated it had received a $2.1 billion offer for its LifeScan business. Based upon the firm's market presence, private equity firm Platinum Equity offered to acquire the blood-glucose monitoring business, which brought in $1.5 billion in revenue last year. At the end of last year, J&J had stated its interest in strategic exit opportunities for its insulin pump subsidiaries and its intention to close its Animas business.

• Last Wednesday, Envision Healthcare (NYSE: EVHC) completed the divestiture of its medical transportation subsidiary, American Medical Response (AMR), for $2.4 billion to Air Medical Group Holdings (AMGH), a portfolio company of KKR. According to Envision executives, the divestiture's proceeds are aimed to reduce the firm's outstanding debt under its current credit facility. The transaction will result in a combined industry-leading air, ground, specialty and residential fire services and managed medical transportation firm known as Global Medical Response (GMR). The completed merger had been in the works for a few years, and both firms have worked alongside each other during recent natural disasters such as hurricanes Harvey, Irma, and Maria as well as the California wildfires.

• Last Tuesday, E-Touch Systems was acquired by the Virtusa Corporation (NASDAQ: VRTU) for $140 million. Virtusa, a global provider of digital engineering and IT outsourcing, entered into an agreement to purchase all outstanding equity of eTouch US and eTouch India. The eTouch US purchase was finalized last Tuesday, whereas eTouch India’s transaction completion is still pending.  Fremont, CA-based eTouch provides digital engineering, digital marketing, cloud, analytics, and data security solutions to clients primarily within the technology industry.
  

• Evident.io reached a definitive agreement to be acquired by Palo Alto Networks (NYSE: PANW) for $300 million in cash this past Thursday. Palo Alto Networks looks to bolster its API-business with the introduction of Evident.io's pre-exisitng cloud-based compliance security capabilities. The firm provides services to large firms utilizing public cloud services, such as Amazon's Web Services and Microsoft's Azure. According to Crunchbase, the five-year-old firm has been backed by more than $49 million in venture capital, including backing from the CIA's VC arm, In-Q-Tel.