USA regulators ask Qualcomm to delay shareholder meeting

Jon Howard
March 6, 2018

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 USA regulators to investigate the deal, and was ordered to postpone the meeting for 30 days.

Qualcomm Inc. shareholder T. Rowe Price Group Inc. submitted an early vote in favor of Broadcom Ltd.'s board nominees, according to a person familiar with the investor's action.

Broadcom had not claimed that it was surprised by the CFIUS investigation, but that it had not known that Qualcomm's voluntary request was behind the probe.

Qualcomm said it would comply with the order and delay its shareholder meeting at least 30 days. Even if the company's slate of 11 directors were to be re-elected, once Broadcom became a US company Qualcomm would have lost the CFIUS arrow in its quiver.

Broadcom is run by a Board of Directors and senior management team consisting nearly entirely of Americans.

Qualcomm fired back accusing Broadcom of trying to mislead shareholders and "trivialize" USA regulatory and national security issues.

Qualcomm, one of Apple's main suppliers, is now engaged in the acquisition of the Dutch group NXP and has indicated the operation will proceed regardless of the outcome of discussions with Broadcom. Broadcom had two meetings on February 14, 2018 and on February 23, 2018 with Qualcomm.

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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 USA government panel forced a delay of the final tally amid concerns about the deal's threats to national security. But over the past week there has been an increasing call for CFIUS to step in as well for security reasons.

President Donald Trump previous year blocked a Chinese-backed takeover of Lattice Semiconductor Corp. because of the importance of semiconductors to the USA government and China's role in the proposed acquisition.

Five other members of Congress signed the Gallagher letter on Friday that was sent to Treasury Secretary Steve Mnuchin. "A disruption of Qualcomm's R & D efforts would in effect hand the growing competition for 5G to China".

KitGuru Says: Qualcomm has never been keen on this takeover proposal, so if the company did in fact get CFIUS involved, then it wouldn't be much of a shock.

If Broadcom is ultimately successful in its takeover attempt, the impact on San Diego could be severe.

Qualcomm has gotten what appears to be a unique ruling from the US government to help it fight off a now foreign acquirer.

Qualcomm's own proposed acquisition of NXP is on hold while it awaits approval by Chinese regulators, that last remaining country not to give the merger its OK. On Monday, it extended its $127.50 per share tender offer until March 9.

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