Graham Walzer/New York Times
NEW YORK — US regulators have asked the giant chipmaker Qualcomm to delay an annual shareholder meeting to give them more time to investigate whether a takeover bid by Broadcom, a Singapore-based rival, would threaten US national security.
The surprise move by a government panel that scrutinizes deals by foreign companies comes amid a charged political atmosphere in which scrutiny of takeovers of US companies by international challengers has increased drastically. That the intervention was made even before a deal between the two chipmakers was formally reached highlights that shift.
The announcement is the latest salvo in a pitched battle between the two companies. The months since the bid was unveiled have been characterized by sharply worded statements and by Qualcomm’s refusal to countenance any takeover attempt.
Broadcom had sought to pave the way for its hostile bid by changing its headquarters to the United States, an announcement that the chief executive, Hock Tan, made alongside President Trump at the White House last year. That reincorporation is due to be completed by early May, and Broadcom has argued that its status as a soon-to-be US company means the deal should not be subject to review. Nonetheless, regulators, who were asked to look at the deal by Qualcomm, pushed for a delay.
Broadcom’s attempted takeover of Qualcomm, initially unveiled in November, would be the largest technology deal in history, creating an industry giant whose products would be in a majority of the world’s smartphones.
The company is seeking to elect six nominees to Qualcomm’s board of directors at the annual meeting, which had been scheduled for Tuesday. That would give it a majority on Qualcomm’s board.
The government panel, the Committee on Foreign Investment in the United States, scrutinizes deals for national security concerns. It has asked Qualcomm to delay the election of directors by 30 days to give it time to “fully investigate” the proposed deal, according to an emailed statement from the Treasury Department. The interagency body, which is known as CFIUS, includes representatives from the Treasury and Justice departments.
The announcement Monday created an additional hurdle for the deal. Qualcomm’s leadership fiercely opposes the Broadcom offer, saying it “materially undervalues” the company, and analysts have said for months that even if shareholders approved it, it could be rejected on antitrust grounds.
Last month, Qualcomm increased its takeover bid for NXP Semiconductors, defying a demand by Broadcom that it not do so. Broadcom then reduced its offer for Qualcomm by $3 a share to $79 a share, valuing the deal at about $117 billion.
The efforts by the two sides illustrate how much is at stake. An increasing number of devices rely on the semiconductors developed by companies like Qualcomm and Broadcom, with chip sales totaling more than $410 billion last year alone. But as increasingly advanced chips are required for more powerful computing tasks, the range of companies able to make such products has narrowed.
On Monday, Broadcom said that it had been informed Sunday night that Qualcomm had filed a voluntary request for a CFIUS review in 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 in a news release.
Qualcomm said Broadcom’s response was “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.” It said it would comply with the CFIUS request to delay the shareholder meeting.
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