Trump prevents Broadcom from acquiring Qualcomm

President Trump blocks the $117 billion Broadcom takeover of Qualcomm on national security grounds

President Trump bans Qualcomm takeover

President Donald Trump has blocked Singapore-based Broadcom's proposed move saying it threatens to impair the national security of the United States.

"Under the terms of the presidential order, all of Broadcom's director nominees are also disqualified from standing for election as directors of Qualcomm", the California-based company said in a statement.

Broadcom said in a statement it was reviewing the order and that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

Qualcomm's executive board secretly approached the CFIUS to review the takeover deal in order to block the deal and protect the company from an acquisition, Broadcom said at the time, and later corroborated by sources speaking to TechCrunch.

In such a scenario, Broadcom - which now works under the laws of Singapore - would have been considered as an American company and thus its proposed Dollars 117 billion would have been considered outside the preview of a federal agency - the Committee on Foreign Investment in the United States (CFIUS)? that reviews foreign deal. Qualcomm had repeatedly rejected Broadcom's bids, citing national security concerns and a belief that the deal undervalues the company.

Even though Singapore-based Broadcom is moving its headquarters to the US, the federal government is still concerned about the company's ties to China, including firms like Huawei.

Qualcomm has confirmed it has received the notice, while Broadcom has yet to respond to TechRadar Pro's requests for comment. Both moves were initiated on national security grounds.

"In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the USA, and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance", the company said in a statement. The Trump administration is considering clamping down on Chinese investments in the USA and imposing tariffs on a broad range of its imports to punish Beijing for its alleged theft of intellectual property.

"Concern has expanded from existing technologies with national security implications potentially falling into rivals' hands to ensuring American companies continue to invest in R&D to maintain their technological edge", he said.

A possible combination of Broadcom and Qualcomm would have created a massive wireless and mobile semiconductor giant with a market cap of over $200 billion.

Over the next couple of days, Broadcom bent over backwards to please CFIUS and other critics of the deal.

The U.S. government's CFIUS had legitimate concerns the proposed acquisition would slow down Qualcomm's push into 5G technology.

The announcement has put an end to what would have been the technology industry's biggest deal ever.

The Trump move underscores growing concerns over Huawei, the third-largest smartphone maker but also a leading telecom infrastructure producer.

In November the USA president and Broadcom chief executive Hock Tan jointly announced the company's decision to relocate its headquarters to the United States, with Trump saying at the time he was "thrilled" at the move.

Also left at the altar is Intel Corporation (NASDAQ:INTC), which had been urged as recently as March 12 to make a bid for Qualcomm to scuttle Broadcom's deal.

And it's unclear if the president even knows that Singapore, where Broadcom is based, is not actually part of China, which appears to be the real target of this order. "In the case of Qualcomm, this will be 5G cellular".

"In the absence of information that changes CFIUS's assessment of the national security risks posed by this transaction, CFIUS would consider taking further action, including but not limited to referring the transaction to the president for decision", Treasury said in the letter, which Qualcomm made public earlier Monday.

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