USA regulators ask Qualcomm to delay shareholder meeting

Nichole Vega
March 6, 2018

A USA national security panel on Sunday ordered Qualcomm Inc to put off its March 6 annual shareholder meeting by a month, delaying a long awaited showdown in the company's attempt to fend off a takeover by Singapore-based Broadcom Ltd.

Qualcomm's shareholder vote will now be delayed at least a month as the Committee on Foreign Investment in the US investigates Broadcom's proposed deal. It has asked Qualcomm to delay the election of directors by 30 days to give it time to "fully investigate" the proposed deal, according to an email from the Treasury Department.

Representatives for Broadcom and Qualcomm declined to comment.

"This can only be seen as an intentional lack of disclosure - both to Broadcom and to its own stockholders", the Singapore-based chipmaker said in a statement.

At the now-postponed meeting, Qualcomm shareholders were going to vote whether to replace six Qualcomm board directors with Broadcom-nominated candidates, a move that could accelerate the acquisition if those candidates were elected and took a majority position on the board.

Broadcom said it would cooperate with the CFIUS review but added that it had just learned that the investigation was due to a secret, voluntary request from Qualcomm in January.

It now appears the government Committee on Foreign Investment in the United States will review the proposed takeover.

Qualcomm has rebuffed the attempts saying that its counterpart has not only undervalued its portfolio and market-shaping potential, but that Broadcom could not guarantee adequate concessions if regulatory barriers ended up stopping the deal from closing.

Broadcom on Monday said Qualcomm did not talk about submitting a voluntary notice to CFIUS in any of its interactions, including in the two meetings on February 14 and February 23. Qualcomm has so far resisted the unsolicited bid as too low and fraught with regulatory challenges.

Qualcomm, which has told 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. The offer was cut from $82 a share, or $121 billion, after Qualcomm raised its bid for NXP Semiconductors. Qualcomm's request for the early decision made sense from the company's point of view: Qualcomm could not afford to wait.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted. Broadcom then reduced its offer for Qualcomm to $79 a share.

Broadcom is incorporated and now based in Singapore, but CEO Hock Tan announced late past year while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the US, likely using San Jose as a base.

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