The US government ordered Qualcomm to delay an upcoming crunch shareholder meeting by a month, as it investigates whether a proposed Broadcom takeover poses a threat to national security.
Qualcomm’s annual general meeting, originally scheduled for tomorrow (6 March), was seen as crucial to determining the company’s future. Shareholders were due to vote on the appointment of six new board members, put forward by Broadcom as it attempts to gain control of the company.
Broadcom’s current offer stands at $79 per share, its third bid since launching a takeover attempt in November 2017 all of which were rejected by Qualcomm. Broadcom earlier said it would honour a previous $82 per share bid if Qualcomm failed in a separate acquisition attempt for NXP Semiconductors.
Singapore-based Broadcom’s takeover bid has, however, now hit its latest snag after the Committee on Foreign Investment in the US (CFIUS) – which is part of the US treasury – ordered a 30-day delay on the Qualcomm shareholder vote, as it looks to investigate the proposed deal.
Broadcom stated in response that it was “disappointed” by the decision, while revealing Qualcomm had secretly filed the request with CFIUS in late January to initiate the investigation.
“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 of nominees,” Broadcom stated.
The company continued to state Qualcomm had not informed it of the request to CFIUS, which “can only been seen as an intentional lack of disclosure – both to Broadcom and its own stockholders. This brings Qualcomm’s ‘engagement theatre’ to a new low”.
Broadcom was previously a US-based company, but was domiciled to Singapore in 2015 following a takeover. The company argued its takeover bid should not be probed by CFIUS, as it plans to move back to the US in fiscal Q2 2018 (the three months to end-April), meaning the deal would not be a foreign takeover.