United States security panel orders delay of Broadcom-Qualcomm showdown

United States security panel orders delay of Broadcom-Qualcomm showdown

United States security panel orders delay of Broadcom-Qualcomm showdown

Now Broadcom won't get that opportunity, as the meeting has been delayed while the U.S. government investigates the deal.

Qualcomm and Broadcom were not immediately available for comment.

"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 nominees", Broadcom said of the delaying development.

Broadcom has nominated six alternative candidates to Qualcomm's 11 member board of directors in a hostile takeover bid.

Separately, Broadcom said the decision was the result of secret moves made by Qualcomm on January 29 to encourage an investigation into the proposed $117 billion (roughly Rs. 7.6 lakh crores) buyout offer. But deals involving foreign companies, especially those of sensitive US technology like semiconductors, have increasingly been in the spotlight. It is critical that Qualcomm stockholders know that Qualcomm did not once mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom to date, including in the two meetings on February 14, 2018 and on February 23, 2018.

Qualcomm is known for mobile chip innovations that set industry standards, for example in new superfast 5G wireless connection technology, the analyst noted.

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Qualcomm has repeatedly rejected multiple Broadcom offers that it says undervalue the company.

The SEC has cleared Broadcom's preliminary proxy statement. CFIUS still has to rule on the potential acquisition, of course, but Qualcomm is probably hoping that an outcry against the takeover of state-of-the-art technology by a foreign buyer will force Broadcom to go away. Broadcom "expects to complete its redomiciliation process to the U.S.by May 6, at which point the proposed acquisition will not be a CFIUS covered transaction", Zino wrote in a report on Monday.

Broadcom's ties to China's largest telecom equipment maker, Huawei Technologies Co., has already raised concerns, although Qualcomm also works with Huawei.

CFIUS is chaired by the U.S. Treasury Secretary and includes representatives for the U.S. Departments of Justice, Defense, Homeland Security, Energy and State. Once Broadcom re-domiciles - now planned for no later than May 6 - the takeover wouldn't be a CFIUS covered transaction, Broadcom said in a statement Tuesday.

Qualcomm shares are down 0.6% to $64.34.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted. Although Qualcomm recently signaled the companies were closing in on a deal, the companies have disagreed on a price, prompting an attempted hostile takeover.

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