American regulators have asked the chip maker Qualcomm to delay its annual shareholder meeting to give them time to investigate whether a takeover bid by Broadcom, a Singapore-based rival, would threaten national security.
Broadcom is pursuing a hostile takeover of Qualcomm, which would be the largest technology deal in history, creating a giant chip maker whose products would be in the majority of the world’s smartphones.
It is seeking to elect six nominees to Qualcomm’s board of directors at the annual meeting, which had been scheduled for Tuesday. That would give it a majority on Qualcomm’s board.
The Committee on Foreign Investment in the United States, a government panel that scrutinizes deals by foreign companies for national security concerns, 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 emailed statement from the Treasury Department. The interagency body, which is known as Cfius, includes representatives from the Treasury and Justice Departments.
Broadcom is based in Singapore, but plans to reincorporate in the United States by early May. It has said it would then be a United States company and the deal would not be subject to review.
On Monday, Broadcom said that it had been informed Sunday night that Qualcomm had filed a voluntary request for a Cfius review in January.
“This was a blatant, desperate act by Qualcomm to entrench its incumbent board of directors and prevent its own stockholders from voting for Broadcom’s independent director nominees,” Broadcom said in a news release.
Qualcomm and Broadcom have been involved in a pitched battle over the potential deal, which Qualcomm says “materially undervalues” the company.
Last month, Qualcomm increased its own takeover bid for NXP Semiconductors, defying a demand by Broadcom that it not do so. Broadcom then reduced its offer for Qualcomm to $79 a share.