The U.S. government ordered Qualcomm to cancel a vote scheduled for Tuesday to allow the government more time to review a potential merger between Qualcomm and Broadcom.
Specifically, the Committee on Foreign Investment in the U.S. (CFIUS) will examine the possible merger. CFIUS is run by the Treasury Department with officials from Defense, Energy, Homeland Security, and Justice all participating. Broadcom is based in Singapore for the time being, though it plans to move back to the U.S. later this year. There are often limits imposed on foreign companies making major purchases in the U.S., particularly when the company involved provides infrastructure and communications equipment to the U.S. government itself.
Broadcom suggested the CFIUS investigation was triggered by Qualcomm as strategic ploy, though Qualcomm says such “dismissive rhetoric” is “a continuation of [Broadcom’s] now familiar pattern of deliberately seeking to mislead shareholders and the general public.
“The move delays Broadcom’s proxy fight against Qualcomm by 30 days. Broadcom has spent several months attempting to purchase Qualcomm, only to be rebuffed by Qualcomm with each new offer. The two firms have met in recent weeks concerning the deal, but are still far apart on some of the big set pieces, such as price. Broadcom aggressively suggested that Qualcomm’s shareholders vote out Qualcomm’s board of directors and replace them with Broadcom directors at a shareholding meeting to be held this week. Qualcomm said 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.”
As such, Qualcomm has agreed to delay the annual stockholders meeting by at least 30 days so it may comply with the CFIUS order.
