March 24, 2018

USA government stalls Qualcomm investor vote to look into Broadcom

06 March 2018, 01:46 | Denise Dawson

Qualcomm says Broadcom deal opens national security issues

Broadcom return to US could be complete in May

Broadcom's hostile takeover bid for chip-making rival Qualcomm has become even more hostile now that a US national security agency over the weekend ordered Qualcomm to delay a shareholder vote scheduled for March 6 that would have set the direction of the proposed $117 billion deal.

The ugly rhetorical war between semiconductor companies Broadcom and Qualcomm got even uglier on Monday.

Broadcom in a statement said that the Qualcomm move is a desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees. Broadcom has nominated six people to serve on Qualcomm's 11-member board of directors.

Broadcom said it would cooperate with the CFIUS review but added that it had just learned that the investigation was due to a secret, voluntary request from Qualcomm in January. The company already is run from the United States, has many USA employees, and owns critical semiconductor operations and technologies, Rasgon noted.

Qualcomm has rebuffed the attempts saying that its counterpart has not only undervalued its portfolio and market-shaping potential, but that Broadcom could not guarantee adequate concessions if regulatory barriers ended up stopping the deal from closing.

Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom. However, in recent weeks, Qualcomm has become more receptive to Broadcom's proposal - that is if the company can sweeten its offer price and pass regulatory oversight.

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Sharma blasted his opening tee shot two feet from the cup for a tap-in eagle. "To be honest, I'm actually relaxed now", he said. A victory at the WGC Championship would make Sharma the first debutant to win on the PGA Tour in about three decades.

U.S. Sen. John Cornyn, a Texas Republican, as well as San Diego-area Congressmen Scott Peters, a Democrat, and Duncan Hunter, a Republican, sent letters to Trump Administration officials requesting a CFIUS review. Qualcomm shot back that Broadcom's claims that the CFIUS inquiry was a surprise to them has "no basis in fact".

Broadcom is pursuing a hostile takeover of Qualcomm, which would be the largest technology deal in history, creating a giant chip maker whose products would be in the majority of the world's smartphones.

The meeting, scheduled for Tuesday, will be pushed back for at least 30 days, Qualcomm said.

"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm", the U.S. Department of Treasury said in a statement.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted.

The Singapore-based chip maker insists that upon completion of its redomiciliation to USA shores by May 6, the deal will no longer be covered by CFIUS. If that result holds up when the final vote takes place, Broadcom would have a mandate to overturn Qualcomm management's opposition to the $117 billion deal.

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