The government stepped in to effectively delay the apparent hostile takeover of U.S. chipmaker Qualcomm by Singapore-based Broadcom Limited that would be the largest tech merger ever.
The Committee on Foreign Investment in the U.S. (CFIUS) directed Qualcomm to “postpone its annual stockholders meeting and election of directors by 30 days” a spokesperson for the Treasury said in a statement Sunday, to give time for CFIUS “to investigate fully Broadcom’s proposed acquisition of Qualcomm.”
Broadcom had hoped to install six friendly board members at a shareholder meeting Tuesday, which would effectively give Broadcom control and allow a vote for Qualcomm to accept Broadcom’s acquisition offer.
Qualcomm is the largest U.S. tech companies and one of the few that manufactures semiconductors, making it a rival to Chinese company Huawei Technologies. Some critics of Broadcom’s merger plans say that domestic control of that technology is an important to maintaining national security and maintaining a stake in the future of 5G technologies.
Reuters first reported in late February that CFIUS was looking into Broadcom’s acquisition efforts. (RELATED: Government Investigates Hostile Takeover Of Critical Tech Company)
The issue is complicated as CFIUS typically doesn’t review a proposed merger until the deal is going forward, and there’s no deal to review since Qualcomm has so far rejected the offers. Broadcom also has promised to move its headquarters to the U.S., which could mean CFIUS would have no authority to block the merger.
ALSO WATCH: YouTube Sponsors 911 Denier
The company is currently located in Singapore, with offices in San Hose, Calif., and is in the process of restructuring to be a publicly traded company incorporated in Delaware, instead of Singapore. That will not be final until the end of Broadcom’s fiscal year May 6, the company said.
During a public ceremony at the White House Nov. 2, Broadcom CEO Hock Tan announced to President Donald Trump and others that he would be moving his company to the U.S. That announcement came as CFIUS was reviewing another merger proposal, Broadcom’s bid to purchase Brocade Communications Systems.
The two companies struggled to gain CFIUS’ approval, and had to refile at one point in October. A few weeks after the Oval Office ceremony, Broadcom announced that it had completed the acquisition of Brocade on Nov. 17.
Several members of Congress have expressed concern about the hostile takeover, fearing it could set a dangerous precedent if a foreign-owned entity can manipulate a company to sell.
“It is my view that failure by CFIUS to review this hostile takeover would potentially encourage other foreign parties to evade CFIUS review by taking control of the boards of sensitive U.S. businesses through proxy fights,” Texas Republican Sen. John Cornyn wrote to the Treasury in February.
Send tips to thomas@
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact email@example.com.