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Washington Steps In to Referee Broadcom Vs. Qualcomm

06 March, 2018, 01:47 | Author: Lydia Fleming
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USA regulators ordered a delay in Qualcomm's annual shareholder meeting, which was scheduled Tuesday, so they can review a proposed $117 billion hostile takeover bid by Broadcom for national security concerns.

Qualcomm fired back accusing Broadcom of trying to mislead shareholders and "trivialize" USA regulatory and national security issues.

Representatives for Broadcom and Qualcomm declined to comment.

The effect of the order is to delay a vote of Qualcomm shareholders on a slate of six Broadcom-nominated candidates to serve on Qualcomm's board of directors.

"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm", the US Department of Treasury said in a statement. "It is critical that Qualcomm stockholders know that Qualcomm did not once mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom to date".

"It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders", the statement concludes. "This brings Qualcomm's "engagement theater" to a new low".

Qualcomm has repeatedly rejected multiple Broadcom offers that it says undervalue the company.

Qualcomm officials countered that the Broadcom response "is a continuation of its now familiar pattern of deliberately seeking to mislead shareholders and the general public by using rhetoric rather than substance to trivialize and ignore serious regulatory and national security issues".

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.

"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. Once Broadcom re-domiciles - now planned for no later than May 6 - the takeover wouldn't be a CFIUS covered transaction, Broadcom said in a statement Tuesday.

Qualcomm, one of Apple's main suppliers, is now engaged in the acquisition of the Dutch group NXP and has indicated the operation will proceed regardless of the outcome of discussions with Broadcom.

Qualcomm and Broadcom are two of the biggest makers of components that are crucial to modern communications systems, including fixed-line and mobile.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted. U.S. President Donald Trump past year blocked a Chinese-backed takeover of Lattice Semiconductor Corp. because of the importance of semiconductors to the U.S. government and China's role in the proposed acquisition. Although Qualcomm recently signaled the companies were closing in on a deal, the companies have disagreed on a price, prompting an attempted hostile takeover.

Shares of Qualcomm (qcom) lost nearly 2% to hit $63.71 in midday trading on Monday and remain well below Broadcom's offer price.



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