Qualcomm Inc. postponed a key investor vote in the hostile takeover battle with rival chipmaker Broadcom Ltd., after the powerful Committee on Foreign Investment in the USA started investigating the proposed combination and ordered a delay.
Qualcomm has pushed back a shareholder meeting that would have determined the fate of a takeover attempt by Broadcom, following a request by the Committee on Foreign Investment in the United States (CFIUS).
Singapore-based Broadcom plans to complete its move back to the United States by mid-May to remove a roadblock to the proposed deal to by calming concerns at CFIUS, Reuters reported on Friday.
T. Rowe voted for all six of Broadcom's nominations, a move which, if followed by enough other shareholders, would give the bidder control of the 11-person Qualcomm board that has so-far shunned the approach.
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.
According to Bloomberg, executives over at Broadcom believe that Qualcomm voluntarily filed to have the CFIUS investigation launched, blasting it as a "blatant, desperate act".
"It would be deeply concerning if foreign parties were able to acquire control of USA companies through proxy fights for their boards without the action first going undergoing a CFIUS review", the congressman wrote, noting that such a move would encourage other foreign companies to also evade CFIUS overview through such means.
Weeks of thrust and parry, along with tactical public statements, have left the companies' boards at odds over the unsolicited offer.
Broadcom has urged Qualcomm shareholders to elect all six of its nominees to the board, sending "a clear signal" supporting the takeover bid which would provide a handsome gain to shareholders of the U.S. firm.
CFIUS past year opposed the takeover of U.S. semiconductor manufacturer Lattice by a Chinese state group backed by a USA investment fund, and President Donald Trump then blocked the deal.
Trump praised the move at the time, calling Broadcom "one of the really great, great companies".
The endorsement of Broadcom's nominees would represent a rejection of Qualcomm's assertion that the company would be stronger if run as a stand-alone business.
Meanwhile, Broadcom is adept at using intellectual property developed by others and making products at low cost, referring to them as "implementers". Broadcom also has promised to move its headquarters to the USA, which could mean CFIUS would have no authority to block the merger. In any case, Qualcomm says it will postpone its shareholder meeting and election of directors for at least 30 days so that CFIUS can carry out its investigation of Broadcom's offer.