Broadcom bid leads U.S. to ask to delay meeting

U.S. regulators have asked giant chipmaker Qualcomm to delay an annual shareholder meeting to give them more time to investigate whether a takeover bid by Broadcom, a Singapore company that is in the process of moving to San Jose, would threaten U.S. national security.

The surprise move by a government panel that scrutinizes deals by foreign companies comes amid a charged political atmosphere in which scrutiny of takeovers of U.S. companies by international challengers has increased drastically. That the intervention was made even before a deal between the two chipmakers was formally agreed to highlights that shift.

Broadcom had sought to pave the way for its hostile bid by changing its headquarters to San Jose. That reincorporation is due to be completed by early May, and Broadcom has argued that its status as a soon-to-be U.S. company means the deal should not be subject to review. Nonetheless, regulators, who were asked to look at the deal by Qualcomm, pushed for a delay.

Broadcom’s attempted takeover of Qualcomm, initially unveiled in November, would be the largest technology deal in history, creating an industry giant whose products would be in a majority of the world’s smartphones.

Broadcom is seeking to elect six nominees to Qualcomm’s board of directors at the annual meeting, which had been scheduled for Tues-

day. That would give it a majority on Qualcomm’s board.

The government panel, the Committee on Foreign Investment in the United States, scrutinizes deals for national security concerns. It has asked Qualcomm to delay the election of directors by 30 days to give it time to “fully investigate” the proposed deal, according to an email from the Treasury Department.

The announcement Monday creates a new hurdle for the deal. Qualcomm’s leadership fiercely opposes the Broadcom offer, saying it “materially undervalues” the company, and analysts have said for months that even if shareholders approved it, it could be rejected on antitrust grounds.

Last month, Qualcomm increased its takeover bid for NXP Semiconductors, defying a demand by Broadcom that it not do so. Broadcom then reduced its offer for Qualcomm by $3 a share to $79 a share, valuing the deal at about $117 billion.

An increasing number of devices rely on the semiconductors developed by companies like Qualcomm and Broadcom, with chip sales totaling more than $410 billion last year alone.