US Government Blocks Broadcom Acquisition of Qualcomm

Andrew Cummings
March 13, 2018

Donald Trump took the unusual step of blocking the Singaporean chip maker Broadcom's bid for its United States rival Qualcomm on Monday night, citing national security concerns and ending what would have been the biggest-ever tech deal.

Trump said his decision was informed by a recommendation from the Committee on Foreign Investment in the United States, an interagency panel that - in its own words - investigates "transactions that could result in control of a USA business by a foreign person".

Although Broadcom is incorporated and based in Singapore, CEO Hock Tan announced late a year ago while visiting Trump at the White House that the company would return its corporate headquarters to the United States, likely using San Jose as a base.

The order issued by the White House cited "credible evidence" that led Mr Trump to believe that Broadcom taking control of Qualcomm "might take action that threatens to impair the national security of the United States".

Broadcom has repeatedly fouled up the politics on this deal and issued clumsy, vague rebuttals to the CFIUS review.

Broadcom had been pursuing Qualcomm for about four months.

President Trump's executive order puts an end to Broadcom's unsolicited pursuit of Qualcomm.

Singapore-based Broadcom had submitted bids ranging from $103 billion to as much as $130 billion.

Broadcom Chief Executive Hock Tan and other Broadcom representatives were scheduled to meet with CFIUS officials on Monday, according to the letter.

[Broadcom] and Qualcomm shall immediately and permanently abandon the proposed takeover.

Still, Griner said the Broadcom-Qualcomm deal "should not be viewed as a bellwether for future Chinese deals [in the US]".

We knew that Broadcom's hostile takeover of Qualcomm was on thin ice, especially considering that the latter thought that the former's offers have greatly undervalued the company.

"I'm particularly glad Broadcom's proposed candidates are prohibited from running for election to Qualcomm's board of directors".

Trump's decision in this regard comes after Broadcom said last Friday that it will ask its shareholders to approve its plan to redomicile to the US.

A leader in wireless technology, including burgeoning fields such as 5G connectivity, Qualcomm had rejected Broadcom's bids for purchase. In September 2017, he blocked Chinese firm Canyon Bridge Fund from acquiring Lattice Semiconductor Corporation (which is based on Oregon), citing national security concerns.

Broadcom's attempts to accelerate the relocation of its corporate headquarters from Singapore to the US may have been a misstep in its efforts to ease CFIUS's concerns.

CFIUS also would need to weigh that Qualcomm provides sensitive products to the US Defence Department, has a dominant role in US telecommunications infrastructure and performs significant research and development, Griner said. While Intel is "eager for Broadcom to fail", it could make a play for the company if the merger gained momentum, the Journal said in another report on Friday.

Shares of Broadcom rose less than 1.0 percent to $264.10 in after hours trade while Qualcomm fell 4.3 percent to $60.14.

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