Qualcomm slams Broadcom criticism of CFIUS investigation as 'dismissive rhetoric'
- Author: Kara Saunders Mar 06, 2018,
Mar 06, 2018, 1:46
Broadcom's hostile takeover bid for chip-making rival Qualcomm has become even more hostile now that a USA national security agency over the weekend ordered Qualcomm to delay a shareholder vote scheduled for March 6 that would have set the direction of the proposed $117 billion deal.
In an unusual intervention, a USA government agency has asked chip-maker Qualcomm to delay a scheduled board meeting so it can review the proposed takeover by semiconductor company Broadcom.
The U.S. government asked Qualcomm Inc.to delay its highly anticipated shareholder vote, slated for Tuesday, for 30 days.
Qualcomm has hit back against Broadcom's criticism of a CFIUS request and has called the firm's comments "dismissive rhetoric" created to mislead shareholders.
"Broadcom could not and will not control the Qualcomm board - the essential basis for CFIUS jurisdiction - in the event some or all of the independent, Broadcom-nominated directors are elected", the company said in a statement.
Shareholders at Qualcomm's annual meeting were to vote whether to replace six of the California company's 11 board members with candidates backed by Broadcom, essentially endorsing the merger deal. Broadcom cried foul, saying this latest turn of events is an "engagement theatre", aimed at changing the will of Qualcomm stockholders.
See stocks near a buy point, get chart pattern recognition and run custom screens. Broadcom has been interacting with CFIUS for weeks and made two written submissions, Qualcomm said. The rival chipmaker accused Qualcomm of "secretly" seeking a voluntarily CFIUS review in January and failing to disclose the move to Broadcom during merger talks.
Qualcomm is known for mobile chip innovations that set industry standards, for example in new superfast 5G wireless connection technology, the analyst noted.
But the Broadcom offer "undervalues" the United States firm, Qualcomm has said, while opening the door to talks if Broadcom boosts its price.
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". 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".
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 takeover was to have come at a meeting scheduled for tomorrow, March 6.
Last month, Qualcomm increased its own takeover bid for NXP Semiconductors, defying a demand by Broadcom that it not do so. Qualcomm said it would challenge that fine.
"Broadcom continues to pursue the redomiciliation process as expeditiously as possible", Broadcom said."Upon completion of the redomiciliation, Broadcom's proposed acquisition of Qualcomm will not be a CFIUS covered transaction".
Qualcomm shares were down 1.2 percent to $63.95 at 12:36 p.m.in NY.