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Qualcomm requests security review of Broadcom bid

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WASHINGTON: US chipmaker Qualcomm postponed its annual shareholders’ meeting after secretly requesting a national security review of Broadcom’s bid to take over the company, the Singapore-based Broadcom announced on Monday.


Qualcomm shareholders were due to meet on Tuesday, but Broadcom said it was informed on Sunday night that Qualcomm filed a voluntary request on January 29 for US regulators to investigate the deal, and was ordered to postpone the meeting for 30 days.


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


Qualcomm fired back accusing Broadcom of trying to mislead shareholders and ‘trivialise’ US regulatory and national security issues.


“Broadcom’s dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom,” the US chipmaker said.


The Committee on Foreign Investment in the United States (CFIUS) can review any acquisition by a foreign corporation of a US firm that may have an impact on national security, and can recommend the president block the deal.


CFIUS has blocked some transactions, but frequently foreign companies withdraw once it appears a transaction will be prohibited.


CFIUS issued an order to Qualcomm for the shareholder meeting to be delayed for 30 days to allow time to fully investigate the proposed acquisition by Broadcom, according to a US Treasury Department.


Broadcom said it will fully cooperate with the review, but rejected any national security concerns since it is a US-controlled company, and is in the process of relocating its headquarters back to the United States.


If finalised, the Broadcom-Qualcomm tie-up, estimated at $117 billion, would be the largest merger in a sector awash with consolidation amid the development of technologies for autonomous vehicles and 5G mobile services. Qualcomm has repeatedly rejected multiple Broadcom offers that it says undervalue the company.


Shareholders at Qualcomm’s annual meeting were to vote whether to replace six of the California company’s 11 board members with candidates backed by Broadcom, essentially endorsing the merger deal.


Weeks of thrust and parry, along with tactical public statements, have left the companies’ boards at odds over the unsolicited offer.


Qualcomm, which is the dominant maker of microprocessors for smartphones, says it has a bright future on its own, especially amid a transition to fifth-generation (5G) wireless communications networks.


The Qualcomm board has also expressed concern that any deal with Broadcom could be delayed or blocked by antitrust regulators around the world.


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 gain to shareholders of the US firm. — AFP


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