The Treasury Department has announced that the Committee on Foreign Investment in the United States (CFIUS) has asked Qualcomm, Inc., to postpone its annual stockholders meeting for 30 days to give it more time to investigate Broadcom Ltd.’s proposed acquisition of Qualcomm. Qualcomm’s meeting had been scheduled for tomorrow.
A Treasury spokesperson said in a statement released yesterday that CFIUS “issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days. This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm.”
Broadcom released a statement today blasting Qualcomm. It said it “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. 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 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,” Broadcom added.
Broadcom noted that in November (TR Daily, Nov. 2, 2017), it “made a public commitment to redomicile to the United States and this process is well underway. The SEC has cleared Broadcom’s preliminary proxy statement, and Broadcom continues to expect to receive all requisite approvals to complete the process by the end of its fiscal second quarter ending May 6, 2018. Broadcom continues to pursue the redomiciliation process as expeditiously as possible. Upon completion of the redomiciliation, Broadcom’s proposed acquisition of Qualcomm will not be a CFIUS covered transaction.”
The company added, “Broadcom, which is run by a Board of Directors and senior management team consisting almost entirely of Americans, and which is largely owned by the same United States institutional investors that own Qualcomm, recognizes the important role CFIUS plays in protecting our national security, and is fully committed to cooperating with CFIUS in any review, just as Broadcom did during its prior successful acquisitions, including its acquisition of Brocade at the end of 2017.
“It should be clear to everyone that this is part of an unprecedented effort by Qualcomm to disenfranchise its own stockholders,” Broadcom added.
But in a statement responding to Broadcom criticism, Qualcomm said that Broadcom’s “response to the order from the Committee on Foreign Investment in the U.S. (CFIUS) is a continuation of its now familiar pattern of deliberately seeking to mislead shareholders and the general public by using rhetoric rather than substance to trivialize and ignore serious regulatory and national security issues. CFIUS is an independent, multi-agency U.S. governmental body charged with protecting U.S. national security. CFIUS has determined that there are national security risks to the United States as a result of and in connection with the transaction proposed by Broadcom.
“Broadcom’s dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom. Broadcom’s claims that the CFIUS inquiry was a surprise to them has no basis in fact. Broadcom has been interacting with CFIUS for weeks and made two written submissions to CFIUS,” Qualcomm added. “In compliance with the CFIUS order, Qualcomm will delay its Annual Meeting of Stockholders and election of directors for at least 30 days so that CFIUS can fully investigate Broadcom Limited’s proposal to acquire Qualcomm.”
In response to Qualcomm’s statement today, Broadcom said that its “only correspondence with CFIUS was in response to CFIUS inquiries about Broadcom’s nomination of directors to the Qualcomm board of directors, and such requests did not reveal that Qualcomm filed to initiate the CFIUS review on January 29, 2018.”
Last week, Senate Majority Whip John Cornyn (R., Texas) asked CFIUS to probe Broadcom’s for Qualcomm, expressing concern about the national security implications of the transaction (TR Daily, Feb. 28). —Paul Kirby, firstname.lastname@example.org
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