The Committee on Foreign Investment in the United States has ordered Qualcomm to delay a shareholder vote to elect a board of directors by 30 days. The order was placed to allow the subsidiary of the Treasury Department to investigate the acquisition maneuvers of Singapore-based Broadcom. The tally was expected to be announced tomorrow.
Before announcing its first bid for Qualcomm, Broadcom had announced that it would begin the corporate redomiciling process to the United States after having been moved from there in 2015. It has since filed three offers ranging between $105 billion to $121 billion in cash and stock for the competing chipmaker.
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. It would also risk cutting off clients worth billions of dollars in business every year.
The crux of attention was then centered on Qualcomm’s annual shareholders meeting where votes would be tallied for the board election. Broadcom has sent ballots out with its own nominations to investors.
CFIUS’s main responsibility is to determine the national security implications of any proposed acquisitions by a foreign party that would result in control of a US business. The fact that these two companies rank high among the largest semiconductor companies in the world further complicates things.
In a statement, Broadcom disclosed that Qualcomm had voluntarily requested CFIUS intervention on January 29 and told none of its shareholders. 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.
“It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders,” the statement concludes.
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. It characterized Broadcom’s release as “a continuation of its now familiar pattern of deliberately seeking to mislead shareholders and the general public.”