U.S. delays Qualcomm Shareholder Meeting to review Broadcom’s offer

U.S. National Security ordered Qualcomm Inc. (NASDAQ: QCOM) to delay its annual shareholder meeting, which was originally planned for March 6. This delay will push back the decision of Broadcom’s (NASDAQ: AVGO) possible $117 billion takeover attempt of Qualcomm.

Qualcomm shares fell by 1.6 percent during Monday’s pre-market hours, while Broadcom fell by 2.4 percent.

On Monday, Broadcom was informed on Sunday that Qualcomm had secretly filed a request with the Committee on Foreign Investments in the United States (CFIUS) to launch an investigation resulting in a delay of Qualcomm’s annual meeting, which was filed back in late January.

“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.” said Broadcom in its 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.”

“This brings Qualcomm's "engagement theater" to a new low.”

CFIUS asked Qualcomm to delay its annual meeting and election of its new board by 30 days.

“The Committee on Foreign Investment in the United States [CFIUS] issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days,” said the U.S. Department of Treasury.. “This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm.”

Sources familiar with the matter say that Qualcomm does sensitive work for the U.S government, which raises concerns in lawmakers and officials saying that Broadcom could possibly sell parts of Qualcomm to weaken the U.S. race to 5G technology, according to the Wall Street Journal.

Qualcomm rejected Broadcom’s highest bid offer of $121 billion, saying that being acquired by Broadcom will only undervalue the company and hurt its takeover attempt for NXP Semiconductors.

Shortly after, Broadcom lowered its bid to $117 billion saying that Qualcomm acts against the best interests of its shareholders after Qualcomm had raised its offer for NXP to $127.50.

Broadcom says its fully cooperate with CFIUS role in protecting the country’s national security, as it has done in the past with its other acquisitions, including Brocade in 2017.

“It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders.” said Broadcom.

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