The largest tech takeover deal in history ran into another stumbling block on Monday after the US government ordered chipmaker QUALCOMM Inc (NASDAQ:QCOM) to delay an upcoming shareholder meeting by a month.
Qualcomm’s Singapore-based rival Broadcom Ltd (NASDAQ:AVGO) is trying to force through a US$117bn takeover, but US authorities are investigating whether or not the deal would pose a threat to national security.
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Stockholders were due to vote on Tuesday (March 6) on whether or not to replace six of the company’s directors with candidates put forward by Broadcom.
In an unusual intervention, the US Treasury department – which leads an inter-agency called the Committee on Foreign Investment in the United States – has told Qualcomm to put off the vote by 30 days.
In a statement, the US Treasury said that the delay “will afford Cfius the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm”.
Broadcom said it was “disappointed” by the decision, adding that Qualcomm had made secret moves to encourage an investigation into the offer, which Qualcomm’s board has said significantly undervalues the company.
“Broadcom was informed on Sunday night that on January 29, 2018, Qualcomm secretly filed a voluntary request with Cfius to initiate an investigation, resulting in a delay of Qualcomm’s annual meeting 48 hours before it was to take place,” read a statement.
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The delay is the latest escalation of tensions in the hostile takeover battle as Qualcomm’s management look to maintain the company’s independence and rebuff any takeover offers.
Analysts said the Treasury’s decision would give Qualcomm and its incumbent management much-needed time to draw breath and present a stronger case to shareholders.
Qualcomm’s stock was down 0.7% to US$64.28 early on Monday.