Broadcom on course to win majority seats on Qualcomm board
07 March 2018
Broadcom Ltd is expected to win all the six seats it is seeking on Qualcomm Inc's board, which is expected to boost its hostile takeover effort. Meanwhile, the final tally was delayed even as concerns mount about the deal's threats to national security.
Broadcom would win a majority of Qualcomm's board seats, based on a count of more than half the votes already cast, boosting the prospects of its hostile takeover, Bloomberg reported citing information it claimed to have received.
If the results hold true when the final vote is held, Broadcom would get a mandate to overturn Qualcomm management's opposition to the $117-billion deal.
According to Qualcomm's board, Broadcom's offer is a gambit to pick up the company at a cheap price. An investor meet to vote on Broadcom's attempt to take control of the board yesterday, was ordered to be postponed by the Committee on Foreign Investment in the US (CFIUS). Both companies blamed each other over the root of the CFIUS investigation.
Though based in the US, Broadcom was acquired by Singapore's Avago Technologies in 2016, making it into a foreign entity requiring CFIUS's permision to acquire a US technology business.
The endorsement of Broadcom's nominees would amount to a rejection of Qualcomm's assertion that the company would be stronger if run as a stand-alone business. Any Broadcom candidates elected would be required to act in the best interest of Qualcomm and its shareholders, according to commentators.
Meanwhile, Huawei is focusing on deals with big telecommunication operators across Asia, the Americas and Europe, with which it will gain prime position to lead the global race for wireless 5G networks, though it is viewed as a security threat by US.
Qualcomm is viewed by CFIUS as a prized US asset in the development of 5G wireless technology, which facilitates transmission of data at very fast speeds. It wants to ensure Qualcomm does not lose its status as a dominant player in wireless chip technology, according to a source familiar with the panel's thinking, US News and World Reports reported.