Qualcomm got a reprieve from a hostile takeover it was sure to lose. A watchdog government agency and a mix of elected officials and businessmen brought pressure for the Qualcomm March stockholder meeting to be delayed 30 days. It was done under unusual circumstances to review the Qualcomm-Broadcom merger as a threat to national security.

This surprise intervention was later backed by President. Trump issuing an executive order to stop a merger for national security protection.

Why did the government step into a nasty hostile takeover of a San Diego business firm? National security of the U.S. brand and the political consequences were key reasons.

A zero-hour cancellation of Qualcomm’s anual meeting and the hostile takeover caught Broadcom off guard after two negotiating sessions with Qualcomm leaders.

The blue proxy distributed by Broadcom appeared to be getting support from a majority of the 78% of investment fund stockholders. The 30-day delay and report from the investigation agency changed all that.

Many of the investment firms owning Qualcomm stock will follow the advice given by two consulting firms that advise companies on potential merger A report from Bloomberg  indicated the investment fund proxy votes already cast were in favor of the Broadcom merger.

Another surprise event was the resignation of Paul Jacobs the Qualcomm board chairman and the CEO Jeffrey Henderson from management positions but both remain members of the board. Apparently the major investment fund stockholders have not been satisfied with Qualcomm management and therefore supported the merger with Broadcom.

The agency that was conducting the review of the proposed merger is called Committee for Foreign Investment In the United State (CFIUS), a committee of the Treasury Department including members from other government agencies concerned with security of the U.S. If the committee conducting the review of a proposed merger suspects any threat to national security or existing anti-trust legislation, it has the authority to intercede

Broadcom was so anxious to acquire Qualcomm that the last and final offer for the stock was increased to $171 billion including 71 shares and $82 in cash. Broadcom also modified its proxy to put five members of their choice on the 11-member board which could make it possible to influence Qualcomm operations.

A few weeks ago a news report stated that Broadcom was not interested in investments in new technology A few weeks later  that statement was rescinded with a media report that the company would continue the work that Qualcomm has devoted to be a leader in the 5G development.

So what should  Qualcomm management due to avoid another take-over? The board of directors must be increased with more outside experts to overcome the “insiders’ club.” The company should hire lobbyists and publicists to keep the name in public attention after all the coverage during the take-over.