Qualcomm slams Broadcom criticism of CFIUS investigation as 'dismissive rhetoric'

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Qualcomm slams Broadcom criticism of CFIUS investigation as 'dismissive rhetoric'

USA regulators have asked giant chipmaker Qualcomm to delay an annual shareholder meeting to give them more time to investigate whether a takeover bid by Broadcom, a Singapore company that is in the process of moving to San Jose, would threaten US national security.

The order by the Committee on Foreign Investment in the United States (CFIUS), which reviews deals that have potential national security implications, heightened tensions between the two companies that have been apparent since China-based Broadcom first proposed buying Qualcomm in November 2017 in what would be by far the largest deal in tech history.

Broadcom is now based in Singapore, but expects to move its headquarters to the U.S.no later than May 6, the company said. That reincorporation is due to be completed by early May, and Broadcom has argued that its status as a soon-to-be USA company means the deal should not be subject to review.

For several months now, Broadcom has been attempting to acquire Qualcomm.

Broadcom is incorporated and now based in Singapore, but CEO Hock Tan announced late past year while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the US, likely using San Jose as a base. Broadcom shareholders are expected to vote on the move in early May. This brings Qualcomm's "engagement theater" to a new low, " Broadcom said. That would give it a majority on Qualcomm's board.

Broadcom, which has prompted the concerns due to the fact that it is based in Singapore, slammed Qualcomm for involving Cfius.

Qualcomm, which has told shareholders it is open to the merger at the right price and terms, had said last week it had no intention of delaying the annual shareholder meeting. Qualcomm said it would challenge that fine. Qualcomm has made it clear in the past that it does not want to sell itself to Broadcom, noting that such a deal would be placed under regulatory scrutiny.

With CFIUS 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.

"This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom's independent director nominees", Broadcom claims.

Qualcomm's shares fell 2 percent in trading before the bell. Broadcom's (avgo) shares also dropped less than 1% to $249.63.

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