Qualcomm Delays Vote As CFIUS Looks At $117B Broadcom Bid

Reuters

US regulators ordered a delay in Qualcomm's annual shareholder meeting, which was scheduled Tuesday, so they can review a proposed $117 billion hostile takeover bid by Broadcom for national security concerns. Qualcomm said in a statement today that it would comply with that request and push back the shareholder meeting by at least 30 days.

Qualcomm did not deny seeking a CFIUS review but accused Broadcom of using misleading rhetoric "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.

The company added that the US Securities and Exchange Commission (SEC) has cleared Broadcom's preliminary proxy statement, and as Broadcom has pledged to redomicile to the US - and its board is made up of individuals which are nearly all American - CFIUS does not have to be involved in this transactions. The company said it recognizes "the important role CFIUS plays in protecting our national security, and is fully committed to cooperating with CFIUS in any review". "This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm".

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Broadcom, whose six nominees for Qualcomm's board are up for a vote at the shareholder meeting, said on Monday Qualcomm had not disclosed any approach to CFIUS in meetings between the two sides over the past month.

The Qualcomm statement said CFIUS is an independent governmental body charged with protecting US national security and "has determined that there are national security risks to the United States as a result of and in connection with the transaction proposed by Broadcom".

"Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom".

Prior to Gallagher's letter, Sen. John Cornyn wrote to the Treasury in February.

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Broadcom noted in its statement that it has "committed" to redomiciling in the United States, that the process is "well underway" and that Broadcom (currently based in Singapore) expects to be a USA -based firm by the end of its second fiscal quarter on May 6, 2018.

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. It would also risk cutting off clients worth billions of dollars in business every year. Any Broadcom candidates elected would be required to act in the best interest of Qualcomm and its shareholders.

CFIUS was apparently split on whether or not to review Broadcom's takeover attempt.

Qualcomm is one of the region's largest private employers, and the family of co-founder Irwin Jacobs is one of the area's most generous philanthropists.

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