Qualcomm AGM delayed as United States investigates security concerns at Broadcom

Broadcom return to US could be complete in May

A USA national security panel on Sunday ordered Qualcomm to put off its March 6 annual shareholder meeting, delaying a long-awaited showdown in the company's attempt to see off a takeover bid by Broadcom.

In a statement issued today, Broadcom described the CFIUS development as "engagement theater" aimed at deferring the will of the Qualcomm stockholders. Since Qualcomm's board of directors have rejected Broadcom's overtures, a direct appeal to shareholders is the company's last chance to see through the merger.

Regardless of which side one believes, the NYT says the intervention of the USA government before a takeover agreement is even reached is somewhat unusual and reflects "a charged political atmosphere in which scrutiny of takeovers of American companies by global challengers has increased drastically". That would give it a majority on Qualcomm's board.

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"It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders", the statement concludes. Qualcomm has so far resisted the unsolicited bid as too low and fraught with regulatory challenges. However, in recent weeks, Qualcomm has become more receptive to Broadcom's proposal - that is if the company can sweeten its offer price and pass regulatory oversight.

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"Qualcomm now has their excuse to postpone their critical vote, giving them some breathing room to work on NXPI, attempt to make progress on their Apple licensing issues, and attempt to build a stronger case for shareholders", said Bernstein analyst Stacy Rasgon. Broadcom called the move "a blatant, desperate act", saying that it expected to complete redomiciling by May 6 and claiming that it would not be under CFIUS jurisdiction.

The government committee, which reviews foreign acquisitions of USA assets with an eye toward national-security interests, is led by the Treasury Department and includes officials from the departments of Justice, Defense, Homeland Security and Energy. CFIUS still has to rule on the potential acquisition, of course, but Qualcomm is probably hoping that an outcry against the takeover of state-of-the-art technology by a foreign buyer will force Broadcom to go away.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted.

The New York Times reports that Broadcom only recently learned that Qualcomm filed a voluntary request to the CFIUS for a review of the deal back in January.

Reuters reported last week that CFIUS had begun looking at Broadcom's bid amid growing pressure from lawmakers, including President Donald Trump's fellow Republicans in Congress. Broadcom then reduced its offer for Qualcomm to $79 a share.

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