Qualcomm’s shareholders will no longer be meeting Tuesday to weigh in on Broadcom’s unsolicited takeover bid for the U.S. chipmaker. According to a Financial Times report, Treasury has stepped in to delay the meeting by a month, to allow the Committee on Foreign Investment in the United States (CFIUS) to investigate the proposed acquisition by Singapore-based Broadcom.
At the meeting, shareholders would have been able to vote on the replacement of six Qualcomm board members with candidates put forward by Broadcom—if they did so, this would effectively be an endorsement of the takeover.
Some on Wall Street and in government have been vociferously against the proposal, partly because of the idea that Broadcom might cut Qualcomm jobs, but also because of the importance of the companies’ products—chips for telecommunications equipment—in the upcoming wave of “5G” mobile broadband technology.
The telecoms industry hopes that 5G will be used to connect billions of objects to the Internet, including things like cars. Those opposed to Broadcom’s $117 billion bid for Qualcomm say it would put the U.S. at a disadvantage in the 5G race against China, and potentially create national security issues.
Broadcom used to also be a U.S. company until it relocated to Singapore in 2015 for tax purposes, and it is in the process of reincorporating in the U.S.
The company is livid that its Qualcomm approach is now on hold. Qualcomm’s board has rejected the offer, and a few days ago it urged shareholders to reelect its members at the annual shareholder meeting that had been scheduled for March 6.
In a Monday statement, Broadcom said Qualcomm had “secretly” asked the CFIUS to investigate back at the end of 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,” Broadcom said.
“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, including in the two meetings on February 14, 2018 and on February 23, 2018. This can only be seen as an intentional lack of disclosure—both to Broadcom and to its own stockholders. This brings Qualcomm’s ‘engagement theater’ to a new low.”
Qualcomm had not responded to a request for comment at the time of writing.