Washington Steps In to Referee Broadcom Vs. Qualcomm
A WSJ Staff Reporter
The U.S. government asked Qualcomm Inc. to delay its highly anticipated shareholder vote, slated for Tuesday, for 30 days. The vote was supposed to determine whether Singapore-based Broadcom Ltd. would advance its hostile $117 billion takeover fight for the San Diego chip maker.
The move is a highly unusual intervention by Washington, and it effectively puts on hold Broadcom's efforts to force Qualcomm to make a deal. Broadcom had nominated a slate of directors supportive of the tie-up. If it had won the shareholder vote, it would have been a big step closer in sealing an agreement. Here's what else you need to know:
What did Broadcom want?
Chief Executive Hock Tan is trying to cap a career of deal making by buying Qualcomm. Management and Qualcomm's board, including Chairman Paul Jacobs, the son of the company's founder, have rejected months of overtures. So, Broadcom nominated six directors for board seats. Had it won all six, it would have had a majority on the 11-person board, making a deal more likely.
Mr. Jacobs and his management team think a go-it-alone strategy is best. It is separately pursuing a $44 billion takeover of European chip giant NXP Semiconductors NV. Qualcomm believes it is nearing the end of a painful patent fight with global regulators and Apple Inc.
Why Is the U.S. government involved?
The Committee on Foreign Investment in the U.S., an interagency group chaired by the U.S. Treasury, reviews foreign acquisitions of American assets that Washington views as potential national security issues. While it typically only weighs in once a deal has been made, Broadcom's board assault has raised early scrutiny, and split the panel.
What is Washington's worry?
Qualcomm does sensitive work for the U.S. government, people familiar with the matter have said. It is also a leading developer of technology and patents for 5G, the next generation of wireless technology that promise the superfast connection needed for self-driving cars, virtual reality and other innovations. Mr. Hock, an American, has said his company is moving its headquarters back to the U.S., after relocating to Singapore some years ago for tax reasons.
(END) Dow Jones Newswires
March 05, 2018 08:23 ET (13:23 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.