undergroundnewsroom.com March 23, 2018

United States regulators ask Qualcomm to delay shareholder meeting

06 March 2018, 01:47 | Jenny Fowler

Qualcomm says Broadcom deal opens national security issues

Broadcom return to US could be complete in May

Singapore-based Broadcom said it was informed Sunday night that Qualcomm had filed a request with the inter-governmental Committee on Foreign Investment in the United States to initiate an investigation.

A U.S. national security panel on Sunday ordered Qualcomm to put off its March 6 annual shareholder meeting, delaying a long-awaited showdown in the company's attempt to see off a takeover bid by Broadcom.

This new turmoil emerges as Broadcom pushed to elect six members of its choosing to the Snapdragon maker's board of directors at the meeting.

To view the full article, register now. The interagency body, which is known as Cfius, includes representatives from the Treasury and Justice Departments. But deals involving foreign companies, especially those of sensitive US technology like semiconductors, have increasingly been in the spotlight.

With CFIUS examining the deal, Qualcomm now can work to close its pending $43 billion acquisition of NXP Semiconductors to diversify its business beyond smartphones, attempt to make progress on patent licensing disputes with Apple and try to construct a stronger case to shareholders to remain a stand-alone company, said Rasgon.

"This was a blatant, 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 said in a statement.

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Qualcomm shares are down 0.6% to $64.34.

Qualcomm shareholders were due to meet Tuesday, but Broadcom said it was informed Sunday night that Qualcomm filed a voluntary request on January 29 for U.S. regulators to investigate the deal, and was ordered to postpone the meeting for 30 days.

Broadcom is largely owned by the same United States institutional investors that own Qualcomm.

As the request was made 48 hours before Qualcomm's Annual Meeting was due to take place, Broadcom suspects that the move was a means to delay a vote which could see Qualcomm board members replaced - and change the rules of the game when it came to a potential merger. Qualcomm's leadership fiercely opposes the Broadcom offer, saying it "materially undervalues" the company, and analysts have said for months that even if shareholders approved it, it could be rejected on antitrust grounds.

Qualcomm and Broadcom are two of the biggest makers of components that are crucial to modern communications systems, including fixed-line and mobile. Broadcom "expects to complete its redomiciliation process to the U.S.by May 6, at which point the proposed acquisition will not be a CFIUS covered transaction", Zino wrote in a report on Monday. But a half-dozen lawmakers called for a review of Broadcom's $79-per-share, roughly $117 billion hostile takeover bid, including Republican Rep. Mike Gallagher of Wisconsin, who said a Broadcom takeover would give a foreign company "visibility into the sensitive work that Qualcomm performs on behalf of the US government".

Broadcom shares lost 1.5 percent by the close of trading in NY, while Qualcomm fell 1.1 percent.

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