Published: Tue, March 06, 2018
Economy | By

Broadcom says Qualcomm asked U.S. security panel to delay shareholder meeting

Broadcom says Qualcomm asked U.S. security panel to delay shareholder meeting

According to a statement from hostile suitor Broadcom Ltd. (NASDAQ: AVGO), Qualcomm "secretly" requested the CFIUS review on January 29.

In a statement to shareholders dated last Thursday, Qualcomm reiterated its opposition to Broadcom's $79 per share offer and urged shareholders to vote to re-elect all 11 existing Qualcomm directors.

The company's hostile takeover attempt has come at a vulnerable time for Qualcomm, which has been embroiled in a long-running legal dispute with Apple and is facing several large fines from governing bodies across the globe, including a $1.23 billion fine recently levied against the company for breaking the European Union's antitrust laws.

Qualcomm is known for mobile chip innovations that set industry standards, for example in new superfast 5G wireless connection technology, the analyst noted.

Yesterday, the Committee on Foreign Investment in the United States (CFIUS) asked Qualcomm to delay its annual shareholder meeting, originally scheduled for tomorrow, so it can investigate the possibility that the takeover from Singapore-based Broadcom Limited (the umbrella organization that controls Broadcom) poses a threat to national security. "The now in a race with China in the development of 5G technologies, a race that will have profound impact on critical U.S. telecommunications infrastructure and on U.S. national security for years to come".

"The Qualcomm board believes it is not in the best interest of Qualcomm's stockholders to elect Broadcom's nominees", it said.

Qualcomm did not mention submitting a voluntary notice to CFIUS in any of its interactions with Broadcom.

Get Data Sheet, Fortune's technology newsletter. The filing means there will be investigation into the objective of the Singapore-based Broadcom's motives behind the acquisition of the US-based Qualcomm.

Qualcomm went on to challenge an assertion that wasn't exactly what Broadcom had asserted.

Qualcomm has repeatedly rejected multiple Broadcom offers that it says undervalue the company.

Qualcomm hit back with a statement claiming Broadcom couldn't have been shocked, since it has been engaging with the CFIUS for weeks.

Shares of Qualcomm (qcom) lost nearly 2% to hit $63.71 in midday trading on Monday and remain well below Broadcom's offer price. Broadcom shares were untraded. US lawmakers in the past have called Chinese companies like Huawei and ZTE a national security threat due to their close ties to the Chinese government.

CFIUS past year opposed the takeover of USA semiconductor manufacturer Lattice by a Chinese state group backed by a U.S. investment fund, and President Donald Trump then blocked the deal.

"Nevertheless, politics can and does have a life of its own, and the early investigation (warranted or not) is proceeding", he wrote. Broadcom has sent ballots out with its own nominations to investors.

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