Broadcom: Qualcomm's Secret Filing Brings "engagement Theater" To New Low

Sen. Tom Cotton (R., Ark.) on Monday praised a USA government panel's decision to order Qualcomm delay its shareholder meeting this week to allow for more time to review Broadcom Ltd.'s takeover bid.

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.

Qualcomm says Broadcom has interacted with CFIUS for weeks, including two written submissions. According to a statement from hostile suitor Broadcom Ltd. (NASDAQ: AVGO), Qualcomm "secretly" requested the CFIUS review on January 29.

"Broadcom continues to pursue the redomiciliation process as expeditiously as possible", Broadcom said."Upon completion of the redomiciliation, Broadcom's proposed acquisition of Qualcomm will not be a CFIUS covered transaction". Qualcomm's shareholder meeting, set to take place on Wednesday, could potentially be a turning point for the deal which Qualcomm has said undervalues the chipmaker as Broadcom looks to aggressively take over the company through a direct appeal to shareholders. Qualcomm said in a statement today that it would comply with that request and push back the shareholder meeting by at least 30 days.

The Qualcomm board has also expressed concern that any deal with Broadcom could be delayed or blocked by antitrust regulators around the world. Qualcomm rejected, saying the price was way below decent.

Broadcom has urged Qualcomm shareholders to elect all six of its nominees to the board, sending "a clear signal" supporting the takeover bid which would provide a handsome gain to shareholders of the USA firm.

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.

Trump praised the move at the time, calling Broadcom "one of the really great, great companies".

Qualcomm was scheduled to have its annual shareholders meeting today, during which Broadcom was going to try and take control of six seats on the board of directors, giving them a majority control over the company. But it would have to pass regulatory muster in several countries.

The rival chip companies are very different in their approaches to the market, Moorhead said, comparing the tie-up to mixing "oil and water". This brings Qualcomm's "engagement theater" to a new low.

In a statement to shareholders dated last Thursday, Qualcomm reiterated its opposition to Broadcom's $79 per share offer and urged shareholders to vote to re-elect all 11 existing Qualcomm directors. Broadcom also has promised to move its headquarters to the US, which could mean CFIUS would have no authority to block the merger.

  • Eleanor Harrison