Qualcomm says Broadcom knew about CFIUS investigation

Bill Rogers
March 6, 2018

Qualcomm has pushed back a shareholder meeting that would have determined the fate of a takeover attempt by Broadcom, following a request by the Committee on Foreign Investment in the United States (CFIUS).

In a statement to shareholders dated last Thursday, Qualcomm reiterated its opposition to Broadcom's $79 per share offer and urged shareholders to vote to re-elect all 11 existing Qualcomm directors.

Broadcom in a statement said that the Qualcomm move is a desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees.

The vote was set to take place Tuesday at Qualcomm's annual shareholders meeting. "Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom".

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Qualcomm did not mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom. "This brings Qualcomm's "engagement theater" to a new low".

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Broadcom's proposed purchase of Qualcomm is valued at about $117 billion.

Four of the Broadcom nominees already have more than 500 million votes, with the other two each nearly 150 million ahead of the nearest Qualcomm candidates, according to the data. "Broadcom's claims that the CFIUS inquiry was a surprise to them has no basis in fact".

"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm", the U.S. Department of Treasury said in a statement. In this case, the CFIUS is stepping in early in the process, and is asking Qualcomm to delay its planned March 6 annual shareholder meeting. An increasingly disbelieving world has since been subjected to the offer being raised and then dropped again following Qualcomm's acquisition of Dutch chipmaker, NXP. According to the NYT, the company "argued that its status as a soon-to-be American company means the deal should not be subject to review". Qualcomm said it would challenge that fine.

In addition, Qualcomm claims that the investigation is no surprise to Broadcom, which has been in communication with the U.S. agency "for weeks" and has made two written submissions to CFIUS itself.

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.

Shares of Qualcomm (qcom) lost nearly 2% to hit $63.71 in midday trading on Monday and remain well below Broadcom's offer price.

Other reports by TheSundaySentinel

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