Qualcomm files for inquiry into national security risk of Broadcom takeover

The US government has delayed a vote by Qualcomm shareholders on a proposed takeover by Singapore-based rival Broadcom due to an investigation into the potential risks to national security which the acquisition might pose.

Qualcomm's shareholders had been set to vote on Tuesday to replace six directors with candidates from Broadcom as part of the hostile $170bn takeover of the chip designer.

Broadcom was informed on 4 March that Qualcomm had filed a request with the Committee on Foreign Investment in the US to investigate if the takeover might endanger national security, the company said in a statement.

Bloomberg had already reported on 1 March that the takeover had drawn the attention of the secretive US panel due to Broadcom’s ties to China.

Broadcom responded by saying it was "disappointed" by the decision.

"This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its stockholders from voting for Broadcom’s independent director nominees."

It also argued that once its redomiciliation to the US was complete, which was expected to occur before 6 May, its purchase of Qualcomm would no longer be covered by CFIUS

"Broadcom, which is run by a Board of Directors and senior management team consisting almost entirely of Americans, and which is largely owned by the same United States institutional investors that own Qualcomm, recognizes the important role CFIUS plays in protecting our national security, and is fully committed to cooperating with CFIUS in any review, just as Broadcom did during its prior successful acquisitions, including its acquisition of Brocade at the end of 2011."