The Committee on Foreign Investment in the United States (Cfius), a panel made up of different USA government departments, asked Qualcomm to delay its annual meeting for 30 days so that it could "fully investigate" Broadcom's proposed deal.
Broadcom has nominated six alternative candidates to Qualcomm's 11 member board of directors in a hostile takeover bid.
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"This measure will afford CFIUS the ability to investigate fully Broadcom's proposed acquisition of Qualcomm", the U.S. Department of Treasury said in a statement. But deals involving foreign companies, especially those of sensitive USA technology like semiconductors, have increasingly been in the spotlight.
In a statement issued today, Broadcom described the CFIUS development as "engagement theater" aimed at deferring the will of the Qualcomm stockholders.
It also reiterated it was confident it would be able to win regulatory approval for a deal to buy Qualcomm within approximately 12 months of reaching an agreement. The takeover was to have come at a meeting scheduled for tomorrow, March 6. "Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom".
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The committee is anxious about the national security implications of Broadcom, a Singapore-based company, taking over the US-based Qualcomm, which provides the bulk of modems used for communications in modern smartphones.
"Broadcom was informed on Sunday night 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", Broadcom said in a statement issued last night.
Qualcomm says Broadcom has interacted with CFIUS for weeks, including two written submissions. CFIUS still has to rule on the potential acquisition, of course, but Qualcomm is probably hoping that an outcry against the takeover of state-of-the-art technology by a foreign buyer will force Broadcom to go away.
"It is my view that failure by CFIUS to review this hostile takeover would potentially encourage other foreign parties to evade CFIUS review by taking control of the boards of sensitive US businesses through proxy fights", Texas Republican Sen.
Broadcom is incorporated and now based in Singapore, but CEO Hock Tan announced late previous year while visiting President Donald Trump at the White House that the company would return its corporate headquarters to the USA, likely using San Jose as a base.
The San Diego-based company's stock was trading at $64, down about 1 percent, on Monday morning.