US Regulatory Review Puts Qualcomm Shareholder Vote on Hold

Qualcomm building is shown in San Diego California U.S. Mike B  REU

Qualcomm building is shown in San Diego California U.S. Mike B REU

"The Committee on Foreign Investment in the United States (CFIUS) issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days", said the U.S. Department of the Treasury on Sunday in an official statement.

Broadcom plans to complete a move of its headquarters from Singapore back to the United States by mid-May to remove a roadblock to the proposed deal, Reuters reported on March 2.

"Broadcom, which is run by a Board of Directors and senior management team consisting nearly entirely of Americans, and which is largely owned by the same United States institutional investors that own Qualcomm, recognizes the important role CFIUS plays in protecting our national security, and is fully committed to cooperating with CFIUS in any review, just as Broadcom did during its prior successful acquisitions, including its acquisition of Brocade at the end of 2017", Broadcom said in its own statement.

The ugly rhetorical war between semiconductor companies Broadcom and Qualcomm got even uglier on Monday. "This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm".

"We can not overstate the likely harm that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to United States security interests", the letter said. Unsurprisingly, Broadcom says this is a desperate move on the part of Qualcomm to stop the takeover.

"Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom", the U.S. chipmaker said.

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Weeks of thrust and parry, along with tactical public statements, have left the companies' boards at odds over the unsolicited offer.

Qualcomm was scheduled to have its annual shareholders meeting today, during which Broadcom was going to try and take control of six seats on the board of directors, giving them a majority control over the company.

That prompted a fusillade from Broadcom, with an equally accusatory response from Qualcomm.

Reuters had reported last week that the panel, which can stop mergers that could harm US security, had begun looking at Broadcom's bid, after pressure from politicians including senior Republican Senator John Cornyn.

The rival chip companies are very different in their approaches to the market, Moorhead said, comparing the tie-up to mixing "oil and water". This brings Qualcomm's "engagement theater" to a new low, " Broadcom said.

Hock Tan, Broadcom's chief executive officer, joined Trump in the White House previous year to announce he was moving Broadcom's headquarters to the USA from Singapore " a move that appeared created to appease US officials and facilitate future acquisitions. Broadcom then reduced its offer for Qualcomm to $79 a share.

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