Broadcom To Scrap Qualcomm Bid After Trump Block

Mar 17, 2018, 01:37
Broadcom To Scrap Qualcomm Bid After Trump Block

US President Donald Trump today blocked Singapore-based company Broadcom's Dollars 117 billion bid for chip maker Qualcomm, citing national security concern.

"The proposed takeover of Qualcomm by [Broadcom] is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited", the executive order said.

Trump's order echoed that concern, saying a takeover by Broadcom "threatens to impair the national security of the United States".

To view the full article, register now.

More news: Tiger Woods at Arnold Palmer

Update: Later in the day on Monday, March 12, after this story was published, President Trump signed an executive order prohibiting Broadcom from acquiring Qualcomm. "The importance of @Qualcomm's research into 5G technology and how it relates to our future can not be understated". John Cornyn of Texas and Tom Cotton of Arkansas, were among the first to urge CFIUS to investigate Broadcom's acquisition attempts.

A Broadcom takeover could see the company cut research and development spending by Qualcomm or sell strategically important parts of the company to other buyers, including those in China, officials and analysts said.

The editorial board notes, however, that Trump could use his authority to block foreign acquisitions of US companies to further protectionist aims.

In its announcement today about the earlier redomiciliation date, Broadcom said it had always planned to complete the move ahead of a planned merger with Qualcomm.

More news: WWE Star Jeff Hardy Arrested for DWI After Car Wreck

Broadcom indicated in its statement it will move forward with its effort to move its headquarters back to the United States. Qualcomm said that Broadcom was fundamentally underestimating the company's value. After Qualcomm rejected the offer, Broadcom launched a proxy contest seeking to control the Qualcomm board.

As of now, it is not clear if such a move from the Singapore-based company will win Trump's approval.

These actions signal the Trump administration's aggressive review posture for Chinese (and other) foreign investment into US technology firms under an ever evolving, expanding view about national security. Even Barack Obama blocked a technology acquisition by a Chinese investment fund citing similar concerns, notes the BBC. The U.S. authorities also recently blocked a proposal by Alibaba's Ant Financial to acquire the money transfer firm Moneygram.

More news: EU, Japan seek to be excluded from U.S. tariffs in talks