Broadcom takeover rollercoaster has yet more in store as Qualcomm postpones shareholder meeting
SAN JOSE, Calif. — Citing a request from the U.S. government, Qualcomm delayed by at least 30 days a shareholder meeting that could have decided the fate of Broadcom’s hostile bid to acquire the company. The meeting, originally scheduled for Tuesday (March 6), would have marked the deadline for a proxy vote for board directors on the largest acquisition proposed in the semiconductor industry to date.
Qualcomm said that its decision came after the Committee on Foreign Investment in the U.S. (CFIUS) indicated that it needed more time to study the proposed $117 billion deal. In an ongoing battle of words, both companies charged that the other was trying to mislead Qualcomm shareholders.
“Broadcom’s claims that the CFIUS inquiry was a surprise to them has no basis in fact,” said Qualcomm in a statement announcing its plans to delay the shareholder meeting. “Broadcom has been interacting with CFIUS for weeks and made two written submissions to CFIUS.”
Broadcom replied in a statement that it “was informed on Sunday night [March 4] that on January 29, 2018, Qualcomm secretly filed a voluntary request with CFIUS to initiate an investigation, resulting in a delay of Qualcomm’s Annual Meeting 48 hours before it was to take place. 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. … It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders.”
At issue for CFIUS is the fact that Broadcom, based in Singapore, is attempting to acquire the U.S.-based Qualcomm. Broadcom’s chief executive, Hock Tan, announced that he is moving the company’s headquarters to the U.S. in a high- profile meeting with President Donald Trump in early November. Broadcom expects to have the approvals that it needs to complete the move by the end of its fiscal second quarter ending May 6.
Broadcom initiated the proxy vote in early December as part of its takeover bid, initially putting up a slate of 11 new board candidates who favored the acquisition. It later pared down its proposal to six candidates, allowing existing chairman Paul Jacobs to remain on the board along with one other existing board member of Qualcomm’s choosing.
Qualcomm has maintained from the beginning that the Broadcom deal, originally valued at $121 billion, undervalues the company. The two companies are at odds in a culture clash over Qualcomm’s culture of spending more heavily on R&D and aggressively asserting a large patent portfolio that has resulted in disputes with regulators and its largest customer, Apple. The dispute was a trigger for Broadcom’s bid to acquire Qualcomm.
Meanwhile, Qualcomm’s proposed acquisition of NXP is still waiting on approval from China’s regulators. To keep the deal alive, Qualcomm announced today that it extended its offer until March 9 at 5 p.m. ET.
Just 10.5% of the outstanding NXP common shares have been tendered to date in the deal originally proposed in late October. Broadcom stated that it will continue its effort to acquire Qualcomm whether or not the NXP deal closes. However, some analysts speculate that Broadcom is mainly interested in Qualcomm’s large smartphone business and much less interested in the many fragmented embedded businesses of NXP.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times