US Republican senator backs review of Broadcom's Qualcomm bid

US Republican senator backs review of Broadcom's Qualcomm bid

Qualcomm Inc. postponed a key investor vote in the hostile takeover battle with rival chipmaker Broadcom Ltd., after the powerful Committee on Foreign Investment in the USA started investigating the proposed combination and ordered a delay.

The Committee on Foreign Investment in the United States (CFIUS), which has the power to stop deals that could harm national security, on Sunday asked Qualcomm to postpone the annual meeting and election of directors by 30 days.

Qualcomm did not comment.

"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", Broadcom said in a statement.

The two companies are locked in a battle over the future of Qualcomm, whose board and management say Broadcom's offer is a gambit to steal the company on the cheap.

While the suggested price of $79 per Qualcomm share - or $82 per share should Qualcomm's planned buyout of NXP Semiconductors fail - has been a constant point of argument, Qualcomm has also said in the past that regulatory hurdles are a serious challenge.

"Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom", the United States chipmaker said.

Broadcom has nominated six alternative candidates to Qualcomm's 11 member board of directors in a hostile takeover bid.

Over the weekend, regulators did get involved. Apparently (as had been suggested was reasonable) "The Committee on Foreign investment in the U.S (CFIUS). which is reportedly now looking into the issue, is a government panel tasked with looking into overseas investments in USA companies".

If finalized, 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.

Cornyn said Qualcomm is the leading US company in driving 5G development, and an acquisition by Broadcom could stall that and hand the leadership of 5G R&D to Huawei, a Chinese tech firm.

Analyst Stacy Rasgon at Bernstein Research doesn't see much likelihood that the CFIUS national security review would find grounds to block a merger.

Broadcom's initial offer already was tinged by politics, coming as it did the day after a White House meeting between Trump and Broadcom CEO Hock Tan, who promised to repatriate the company's headquarters.

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

Qualcomm has rebuffed the attempts saying that its counterpart has not only undervalued its portfolio and market-shaping potential, but that Broadcom could not guarantee adequate concessions if regulatory barriers ended up stopping the deal from closing.