Broadcom Cries Foul As Qualcomm Delays Shareholder Vote On Takeover

Qualcomm building is shown in San Diego California U.S. Mike B  REU

The U.S. Committee on Foreign Investment in the United States (CFIUS) on Sunday chose to delay Qualcomm's upcoming shareholder meeting on Thursday, a highly unusual move by Washington.

Federal regulators have ordered San Diego-based Qualcomm to postpone a stockholders vote on whether to sell the company to rival chip maker Broadcom, due to national security concerns raised by several members of Congress.

Broadcom slammed Qualcomm's decision to "secretly" file a voluntary request with CFIUS to start an investigation, labeling it a "blatant, desperate act" to entrench its incumbent board of directors.

"This can only be seen as an intentional lack of disclosure - both to Broadcom and to its own stockholders", the Singapore-based chipmaker said in a statement.

Qualcomm did not deny seeking a CFIUS review but accused Broadcom of using misleading rhetoric "to trivialize and ignore serious regulatory and national security issues".

"Broadcom has been interacting with CFIUS for weeks and made two written submissions to CFIUS", the Qualcomm statement said.

The two companies are locked in a battle over the future of Qualcomm, whose board and management say Broadcom's offer is a gambit to steal the company on the cheap. Qualcomm rejected, saying the price was way below decent.

CFIUS was apparently split on whether or not to review Broadcom's takeover attempt. In the letter, Cornyn also noted Qualcomm's significant role in the development of 5G technologies and that the United States is competing against China in this field.

The Committee on Foreign Investment in the United States (CFIUS) can review any acquisition by a foreign corporation of a USA firm that may have an impact on national security, and can recommend the president block the deal. But CFIUS-which includes officials from the Defense, Energy, Homeland Security, and Justice departments-is taking more time to review the bid to determine whether a foreign acquisition of Qualcomm constitutes a national security threat. "Better to keep it in American hands and protect American national security".

US President Donald Trump jokes with Broadcom CEO Hock Tan as he announces that Broadcom woud be moving back to the US in the Oval Office at the White House in Washington, DC, on November 2, 2017.

Broadcom, which was created through a series of mergers of semiconductor companies, said it is on track to become based in Silicon Valley by the end of its fiscal second quarter ending May 6.

T. Rowe voted for all six of Broadcom's nominations, a move which, if followed by enough other shareholders, would give the bidder control of the 11-person Qualcomm board that has so-far shunned the approach.

Broadcom has been trying for months to take over Qualcomm in a blockbuster $95 billion deal that would massively consolidate the semiconductor market.

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