Broadcom Is on Course to Win Majority of Qualcomm Board Seats

Broadcom Is on Course to Win Majority of Qualcomm Board Seats

Broadcom Is on Course to Win Majority of Qualcomm Board Seats

That throws up a major roadblock for Broadcom's $117 billion bid, since shareholders were scheduled to vote on six director nominees proposed by the Singapore-based company, potentially giving it a majority on Qualcomm's board.

The Committee on Foreign Investment in the United States (Cfius), a panel made up of different USA government departments, asked Qualcomm to delay its annual meeting for 30 days so that it could "fully investigate" Broadcom's proposed deal.

"It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders", Broadcom said in a statement. The national security body ordered Qualcomm to delay its shareholder meeting by a month so it could review the deal.

Qualcomm hit back with a statement claiming Broadcom couldn't have been shocked, since it has been engaging with the CFIUS for weeks. Broadcom had two meetings on February 14, 2018 and on February 23, 2018 with Qualcomm.

Broadcom is run by a Board of Directors and senior management team consisting nearly entirely of Americans.

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In response to Broadcom's comments, Qualcomm said that Broadcom's response to the move another ploy in a "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". Broadcom also has promised to move its headquarters to the US, which could mean CFIUS would have no authority to block the merger.

Broadcom's proposed takeover of Qualcomm would be the largest deal ever in semiconductors, creating a chip juggernaut with a leading market position in many top chips used in smartphones. National security is also the reason the president gave last week for imposing tariffs on imported steel and aluminum.

U.S. President Donald Trump previous year blocked a Chinese-backed takeover of Lattice Semiconductor Corp. because of the importance of semiconductors to the U.S. government and China's role in the proposed acquisition.

Five other members of Congress signed the Gallagher letter on Friday that was sent to Treasury Secretary Steve Mnuchin. Broadcom then reduced its offer for Qualcomm to $79 a share. But it now appears willing to continue to pursue its bid for Qualcomm through the CFIUS review, said Bernstein Research Analyst Stacy Rasgon in a research note.

The Committee on Foreign Investment in the United States (CFIUS) can review any acquisition by a foreign corporation of a U.S. firm that may have an impact on national security, and can recommend the president block the deal. Getting NXP into the fold would increase Qualcomm's presence in such areas as 5G, the internet of things and autonomous vehicles. On Monday, it extended its $127.50 per share tender offer until March 9.

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