United States simplifies Qualcomm decision by complex means

Qualcomm asked U.S. security panel to delay shareholder meeting Broadcom

Broadcom's investors (and Wall Street!) are favorable towards the deal, but Qualcomm itself has been fighting hard against the takeover.

In a February 26 letter to Treasury Secretary Steve Mnuchin, Rep. John Cornyn, R-Texas, the second-ranking Republican in the House of Representatives, asked Mnuchin to have CFIUS get involved given not only that a China-based company was trying to buy an American entity, but that it was doing so through a hostile takeover. "Better to keep it in American hands and protect American national security".

That prompted a fusillade from Broadcom, with an equally accusatory response from Qualcomm.

Broadcom slammed Qualcomm's decision to "secretly" file a voluntary request with CFIUS to start an investigation, labelling it a "blatant, desperate act" to entrench its incumbent board of directors.

"This can only be seen as an intentional lack of disclosure - both to Broadcom and to its own stockholders", the Singapore-based chipmaker said in a statement. The takeover was to have come at a meeting scheduled for tomorrow, March 6.

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"We can not overstate the likely harm that would result to Qualcomm, the USA company leading the development of 5G and other next-generation technologies, as well as to United States security interests", the letter said.

Last month, Qualcomm increased its own takeover bid for NXP Semiconductors, defying a demand by Broadcom that it not do so.

Cotton said in a statement that Qualcomm's work is "too important" to allow a hostile takeover by a foreign company. "Broadcom has been interacting with CFIUS for weeks and made two written submissions to CFIUS".

The company added that the US Securities and Exchange Commission (SEC) has cleared Broadcom's preliminary proxy statement, and as Broadcom has pledged to redomicile to the US - and its board is made up of individuals which are nearly all American - CFIUS does not have to be involved in this transactions.

The San Diego-based company's stock was trading at $64, down about 1 percent, on Monday morning.

Despite Broadcom's plans to move back to the United States, CFIUS has already shown an interest in the proposed transaction because Broadcom has proposed six directors for Qualcomm's 11-member board.

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

"Nevertheless, politics can and does have a life of its own, and the early investigation (warranted or not) is proceeding", he wrote.

"The Committee on Foreign Investment in the United States issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days", a Treasury spokesman said in a statement.

Broadcom has argued that CFIUS' concern is unwarranted since it does not control the directors that it proposed.



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