United States seeks to delay vote in Qualcomm-Broadcom takeover

Broadcom return to US could be complete in May

Qualcomm's shareholder vote will now be delayed at least a month as the Committee on Foreign Investment in the USA investigates Broadcom's proposed deal.

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

Delaying the Qualcomm shareholder vote by at least a month will give CFIUS more time to investigate the impact of a Broadcom takeover of Qualcomm.

"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.

It is seeking to elect six nominees to Qualcomm's board of directors at the annual meeting, which had been scheduled for Tuesday.

Broadcom slammed Qualcomm's decision to "secretly" file a voluntary request with CFIUS to start an investigation, labeling it a "blatant, desperate act" to entrench its incumbent board of directors. Broadcom began a hostile bid for Qualcomm late a year ago, and has largely been rebuffed for its advances.

Broadcom is largely owned by the same United States institutional investors that own Qualcomm. Qualcomm has so far resisted the unsolicited bid as too low and fraught with regulatory challenges.

Once Broadcom re-domiciles " now planned for no later than May 6 " the takeover would not be a CFIUS covered transaction, Broadcom said in the statement. For its part, Qualcomm thinks that Broadcom's accounting of events is implausible, as it claims its suitor has been in contact with the CFIUS "for weeks" and has made two "written submissions" to the body.

CFIUS is chaired by the U.S. Treasury Secretary and includes representatives for the U.S. Departments of Justice, Defense, Homeland Security, Energy and State.

Qualcomm is the largest USA tech companies and one of the few that manufactures semiconductors, making it a rival to Chinese company Huawei Technologies. Qualcomm said it would challenge that fine.

"It is my view that failure by CFIUS to review this hostile takeover would potentially encourage other foreign parties to evade CFIUS review by taking control of the boards of sensitive US businesses through proxy fights", Texas Republican Sen.

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.

Qualcomm's shares fell 2 percent in trading before the bell. Broadcom "expects to complete its redomiciliation process to the U.S.by May 6, at which point the proposed acquisition will not be a CFIUS covered transaction", Zino wrote in a report on Monday.

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