Qualcomm’s ongoing battle to ward off a hostile takeover attempt by the competitive chip-giant Broadcom gained more intrigue as the U.S. Treasury Department told Qualcomm to postpone its annual stockholder meeting.
The U.S. Department of Treasury’s Committee on Foreign Investment in the United States (CFIUS) late Sunday ordered the meeting delay and told Qualcomm to postpone a board of directors election for 30 days. The CFIUS said it needs additional time to investigate Broadcom’s proposed acquisition of San Diego-based Qualcomm.
Following the CFIUS order, Qualcomm and Broadcom spent this morning trading bards worthy of grade school.
Broadcom’s statement claimed Qualcomm “secretly filed a voluntary request with CFIUS to initiate an investigation” in a move to delay Qualcomm’s annual meeting.
“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 noted in its statement. The firm added that it had no advance warning of the move despite two meetings with Qualcomm management last month.
Broadcom last week urged Qualcomm investors to vote for six board members it had nominated for Qualcomm’s board.
Qualcomm countered that Broadcom’s claim of surprise “has no basis in fact,” and that Broadcom has been interacting with the CFIUS, including a pair of filings of its own.
“Broadcom Limited’s response to the order … is a continuation of its now familiar pattern of deliberately seeking to mislead shareholders and the general public by using rhetoric rather than substance to trivialize and ignore serious regulatory and national security issues,” Qualcomm wrote. “CFIUS 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.”
The national security risk is just one of the issues in this deal. Broadcom’s current corporate structure has the company based in Singapore. However, the company last November announced plans to alter that structure to a U.S.-based location.
Broadcom plans to move its legal address to Delaware and keep its U.S. headquarters in San Jose, California.
The restructuring announcement in November was made by Broadcom CEO Hock Tan during an Oval Office press conference standing next to U.S. President Donald Trump. It was initially linked to the government’s tax reform plan, though also aligned with Broadcom’s then-pending $5.9 billion acquisition of U.S.-based Brocade. That deal closed shortly thereafter.
Just days after announcing the corporate restructuring, Broadcom made its initial offer to acquire Qualcomm. Broadcom has not yet set an official date to complete its restructuring plans.
Another issue is money. Qualcomm has repeatedly claimed the Broadcom offers have undervalued Qualcomm, hinting that perhaps it just wants more money. “We determined it was in the best interests of stockholders to wait for a substantially improved offer,” Qualcomm noted in a statement last week.
NXP Quest Continues
While all of this is going on, Qualcomm continues its efforts to close on a $44 billion acquisition of rival NXP Semiconductors.
Qualcomm, through an indirect wholly owned subsidiary, extended the timeframe for NXP shareholders to accept the pending offer. Those shareholders now have until March 9 to accept the recently increased offer.
Qualcomm had initially offered $110 per NXP share when the deal was first announced late last year. Last month Qualcomm increased that offer to $127.50 per share. That move, in turn, resulted in Broadcom lowering its initial $130 billion offer for Qualcomm.
In a press release, Qualcomm said 10.5 percent of NXP outstanding shares had accepted the offer. Qualcomm already had agreements in place with nine large NXP shareholders to tender their combined 28 percent holdings to the deal. The deal requires 70 percent of NXP shares to be tendered.
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