US CFIUS requires Qualcomm's shareholders to postpone the investigation and will fully investigate Broadcom's acquisition!
Qualcomm initially planned to hold its annual shareholders' meeting on March 6, local time, to elect a new board member. However, Broadcom intended to launch a proxy contest during the meeting, aiming to gain influence over Qualcomm's board. The Qualcomm board had previously supported the smooth acquisition process, but the situation has since evolved dramatically.
According to recent reports from Reuters, the U.S. Treasury announced on February 5 that the Committee on Foreign Investment in the United States (CFIUS) issued a temporary injunction requiring Qualcomm to delay its March 6 shareholders’ meeting for 30 days. This move allows CFIUS sufficient time to thoroughly investigate Broadcom’s bid to acquire Qualcomm.
The battle between Broadcom and Qualcomm began last year when Broadcom proposed a $100.5 billion offer to acquire Qualcomm. To push through the acquisition, Broadcom aimed to win a proxy fight by nominating 11 directors to replace Qualcomm’s existing board members. Qualcomm’s board strongly opposed this move, stating they would not appoint any of Broadcom’s nominees at the meeting. Instead, they planned to re-elect their current directors.
In response, Qualcomm implemented various countermeasures, including offering large severance packages to deter the acquisition, seeking support from partners to oppose the deal, and launching a stock buyback program to boost its stock price. Despite these efforts, Broadcom increased its offer by 17% to over $121 billion and reduced the number of nominees to six, claiming it would ensure board continuity and gain shareholder support.
However, Qualcomm found the revised offer still unattractive and believed Broadcom lacked sincerity. In an effort to strengthen its position, Qualcomm raised its offer for NXP Semiconductors from $110 per share to $127.50, increasing the total transaction value to around $44 billion. This move was seen as a strategic step to make a future Broadcom acquisition more difficult, both financially and politically.
In response, Broadcom cut its offer by 4%, lowering it to $117 billion. This led Qualcomm to suddenly shift its stance, proposing a $160 billion offer—including debt—and even agreeing to pay up to $14.4 billion in breakup fees if the deal fell through. This unexpected change put pressure on Broadcom, which had just lowered its bid.
Despite this, analysts believe Broadcom is unlikely to agree to Qualcomm’s terms. Instead, the company may still pursue a proxy fight, aiming to secure enough board seats to push forward the acquisition. However, the shareholders’ meeting scheduled for March 6 was postponed by CFIUS for 30 days, adding uncertainty to the timeline.
CFIUS, a federal committee composed of representatives from multiple government agencies, has been reviewing the potential national security implications of the deal. Several U.S. officials, including Senator John Cornyn, have urged CFIUS to act quickly, citing concerns over Broadcom’s control of Qualcomm’s board.
Broadcom had previously announced plans to relocate its headquarters from Singapore to the U.S., hoping to ease regulatory concerns. However, with only a month before the meeting, it may not be feasible for the company to complete the move in time.
Meanwhile, the European Union also expressed concerns about the potential transfer of sensitive data if Broadcom acquired Qualcomm. Additionally, China’s approval of Qualcomm’s acquisition of NXP remains pending, and its decision could significantly impact the entire transaction.
As the situation unfolds, the outcome of this high-stakes battle between two tech giants remains uncertain, with political, financial, and regulatory factors all playing a critical role.
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