Qualcomm annual meeting postponed for national security review
- Author: Rita Burton Mar 06, 2018,
Mar 06, 2018, 1:30
The Committee on Foreign Investment in the United States has ordered Qualcomm to delay a shareholder vote to elect a board of directors by 30 days.
The Committee on Foreign Investment in the United States (Cfius), a panel made up of different U.S. government departments, asked Qualcomm to delay its annual meeting for 30 days so that it could "fully investigate" Broadcom's proposed deal.
Qualcomm and Broadcom were not immediately available for comment.
Analyst Stacy Rasgon at Bernstein Research doesn't see much likelihood that the CFIUS national security review would find grounds to block a merger.
Once Broadcom re-domiciles " now planned for no later than May 6 " the takeover would not be a CFIUS covered transaction, Broadcom said in the statement. Also, Broadcom state its board and senior management are mostly American.
Broadcom Limited's response to the order from the Committee on Foreign Investment in the U.S. (CFIUS) is a continuation of its now familiar pattern of deliberately seeking to mislead shareholders and the general public by using rhetoric rather than substance to trivialize and ignore serious regulatory and national security issues.
Qualcomm reacted with its own statement, saying that Broadcom had already filed documents with CFIUS twice in the past several weeks and should not be surprised about the order.
Broadcom Ltd. is on course to win all six of the seats it's seeking on Qualcomm Inc.'s board, giving it a majority to push forward with its hostile takeover even as a US government panel forced a delay of the final tally amid concerns about the deal's threats to national security.More news: Missouri Governor Eric Greitens Indicted with Felony Invasion of Privacy After Affair
Tan has tried to ease the path to regulatory clearance and facilitate future acquisitions, meeting with Trump in the White House past year to announce he was moving Broadcom's headquarters to the USA from Singapore. But over the past week there has been an increasing call for CFIUS to step in as well for security reasons.
Reuters had reported last week that the panel, which can stop mergers that could harm USA security, had begun looking at Broadcom's bid, after pressure from politicians including senior Republican Senator John Cornyn.
They were joined late Friday by five other members of Congress, led by Wisconsin Republican Mike Gallagher.
If Broadcom is ultimately successful in its takeover attempt, the impact on San Diego could be severe.
"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.
Qualcomm still is awaiting approval from regulators in China to acquire NXP.
Broadcom's proposed purchase of Qualcomm is valued at about $117 billion. On Monday, it extended its $127.50 per share tender offer until March 9.