U.S. government stalls Qualcomm investor vote to look into Broadcom

Marcus Newton
March 6, 2018

The order adds to signs that Broadcom's promise to move its official base back to the United States before it completes the proposed $117 billion takeover may not be enough for US officials at a time when global trade tensions are rising.

Massive chipmaker Qualcomm, currently targeted by aggressive acquisition attempts by Broadcom, is now delaying a pivotal meeting with shareholders this week that would determine its fate going forward by at least a month to comply with regulators regarding the deal.

The intervention is meant to give the panel more time to review what would be the world's biggest technology-industry takeover ever, the Wall Street Journal reported. The committee is charged with ensuring that technologies or other resources critical to national security don't fall under the control of adversaries.

"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.

In what Broadcom calls an "engagement theater", the company claims that Qualcomm did not disclose the request to Broadcom, which was seen as an "intentional lack of disclosure". 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 USA government".

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Separately, Broadcom said on Monday that the decision by CFIUS was the result of secret moves made by Qualcomm on January 29 to encourage an investigation into the offer, which Qualcomm's board has said significantly undervalues the company. Broadcom's investors (and Wall Street!) are favorable towards the deal, but Qualcomm itself has been fighting hard against the takeover.

"We can not overstate the likely harm (from a Broadcom hostile takeover) that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to the United States security interests", said the Gallagher letter. First, Broadcom offered Qualcomm a takeover deal worth $103 billion.

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. Qualcomm has made it clear in the past that it does not want to sell itself to Broadcom, noting that such a deal would be placed under regulatory scrutiny.

CFIUS's main responsibility is to determine the national security implications of any proposed acquisitions by a foreign party that would result in control of a USA business. Getting NXP into the fold would increase Qualcomm's presence in such areas as 5G, the internet of things and autonomous vehicles.

Other reports by MaliBehiribAe

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