Broadcom Cries Foul As Qualcomm Delays Shareholder Vote On Takeover

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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.

The crux of attention was then centered on Qualcomm's annual shareholders meeting where votes would be tallied for the board election.

In a statement March 5, Broadcom officials accused their Qualcomm counterparts of using CFIUS to slow down Broadcom's acquisition efforts by "secretly [filing] a voluntary request with CFIUS to initiate an investigation, resulting in a delay of Qualcomm's Annual Meeting 48 hours before it was to take place". But deals involving foreign companies, especially those of sensitive US technology like semiconductors, have come increasingly under the spotlight recently. 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".

See stocks near a buy point, get chart pattern recognition and run custom screens. "This can only be seen as an intentional lack of disclosure, both to Broadcom and to its own stockholders". Qualcomm has so far resisted the unsolicited bid as too low and fraught with regulatory challenges. Once Broadcom is a US company, CFIUS would no longer have authority to review a proposed transaction. Broadcom shareholders are expected to vote on the move in early May. Broadcom called the move "a blatant, desperate act", saying that it expected to complete redomiciling by May 6 and claiming that it would not be under CFIUS jurisdiction.

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Qualcomm, which is trying to convince shareholders it is open to the merger at the right price and terms, said last week it had no intention of delaying the annual shareholder meeting.

Last month, Qualcomm increased its own takeover bid for NXP Semiconductors, defying a demand by Broadcom that it not do so.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted. 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. According to the NYT, the company "argued that its status as a soon-to-be American company means the deal should not be subject to review".

Shares of Qualcomm (qcom) lost nearly 2% to hit $63.71 in midday trading on Monday and remain well below Broadcom's offer price.