Tech's biggest takeover could be blocked by the U.S. government

Qualcomm shareholder meeting pushed forward by a month

Tech's biggest takeover could be blocked by the U.S. government

In the letter from the Treasury official, the government said it was important to have a well-known and trusted company "hold the dominant role that Qualcomm does in the USA telecommunications infrastructure". Broadcom said a year ago it plans to move its headquarters to the United States from Singapore.

Reuters says the U.S. asked Qualcomm to postpone a shareholder meeting so it can scrutinize Broadcom's bid for the chipmaker.

Broadcom, which has put forward a selection of candidates for the board of directors which it hoped to have elected at the meeting, responded to the announcement by once again accusing Qualcomm of "engagement theatre".

The US government on Sunday ordered a national security review of Singapore-based Broadcom's US$117 billion (S$154 billion) bid for Qualcomm.

Broadcom said in a statement it was cooperating with CFIUS.

Qualcomm said in a statement late on March 5 that it was delaying its 2018 annual meeting to April 5 as a result of the CFIUS order.

The move complicates an already contentious deal and increases the likelihood that Broadcom, which is based in Singapore, will end its pursuit of Qualcomm.

Broadcom said on Monday it is run by a board and senior management team consisting nearly entirely of Americans and is largely owned by the same US institutional investors that own Qualcomm.

"A shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States", the government said in the letter. He has proposed legislation to tighten CFIUS' scrutiny of deals. But over the past week there has been an increasing call for CFIUS to step in as well for security reasons.

CFIUS' stance has toughened as U.S. President Donald Trump seeks to pressure China to help tackle North Korea's nuclear ambitions and be more accommodative on trade and foreign exchange issues.

They were joined late Friday by five other members of Congress, led by Wisconsin Republican Mike Gallagher.

A government panel, the Committee on Foreign Investment in the United States, noted, in part, that the potential risk was related to Broadcom's relationships with foreign entities, according to a letter from a U.S. Treasury official. "A disruption of Qualcomm's R & D efforts would in effect hand the growing competition for 5G to China".

Cornyn said on March 5 he was glad CFIUS had made a decision to review the deal, noting that "some of our worldwide rivals, like China, have been incredibly aggressive and strategic". First, Broadcom offered Qualcomm a takeover deal worth $103 billion.

"Qualcomm now has their excuse to postpone their critical vote, giving them some breathing room to work on its acquisition of NXP Semiconductors NV, attempt to make progress on their Apple Inc licensing issues, and attempt to build a stronger case for shareholders", said Bernstein analyst Stacy Rasgon. On Monday, it extended its $127.50 per share tender offer until March 9. Both trade on the Nasdaq.

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