Federal Regulators Ask Qualcomm To Postpone Broadcom Bid Vote

Broadcom's bid to take over Qualcomm is delayed for a national security review

"It is critical that Qualcomm stockholders know that Qualcomm did not once mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom to date", the Singapore-based company said in its statement. The current USA government has shown itself to be exceedingly wary of foreign technology investment, as indicated by its recent shut-out of Chinese telecom infrastructure company Huawei. 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.

However, Bloomberg reports this afternoon that Broadcom is on course to win all six of the seats that it is seeking on Qualcomm's board.

The meeting was supposed to be Tuesday morning, but the Committee on Foreign Investment in the United States requested a month delay late Sunday after it made a decision to look at Broadcom Ltd.'s hostile takeover bid for Qualcomm.

Reuters reported last week that CFIUS had begun looking at Broadcom's bid as pressure grew from politicians, including senior Republican U.S. Senator John Cornyn.

CFIUS views Qualcomm as a prized USA asset in the development of 5G wireless technology, which allows for the transmission of data at very fast speeds. "This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm".

Federal regulators have ordered San Diego-based Qualcomm to postpone a stockholders vote on whether to sell the company to rival chip maker Broadcom, due to national security concerns raised by several members of Congress. In practice, reviews by CFIUS often lead to the demise of deals.

A CFIUS review in itself does not mean a deal will be halted.

More news: United Kingdom seeks to remain member of some European Union agencies

Qualcomm shares closed at $64.01 on Wall Street, down 73 cents. But it now appears willing to continue to pursue its bid for Qualcomm through the foreign-investment committee review, said Bernstein research analyst Stacy Rasgon in a research note. Despite those issues, Qualcomm officials have met with Broadcom executives and last month kept open the possibility of continued talks over price and other concerns.

In a statement, Broadcom disclosed that Qualcomm had voluntarily requested CFIUS intervention on January 29 and told none of its shareholders.

At issue for CFIUS is the fact that Broadcom, based in Singapore, is attempting to acquire the US -based Qualcomm.

Broadcom initiated the proxy vote in early December as part of its takeover bid, initially putting up a slate of 11 new board candidates who favored the acquisition.

With the committee examining the deal, Qualcomm now can work to close its pending $43 billion acquisition of NXP Semiconductors to diversify its business beyond smartphones, attempt to make progress on patent licensing disputes with Apple and try to construct a stronger case to shareholders to remain a stand-alone company, said Rasgon.

On Sunday, CFIUS instructed Qualcomm to delay by 30 days its annual shareholder meeting, which had been scheduled for Tuesday.

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