Trump blocks Broadcom's attempt to buy Qualcomm

13 March, 2018, 11:17 | Author: Edward Snyder
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President Donald Trump, for his part, officially declared on Monday that the proposed $117 billion deal was prohibited on national security grounds.

"There is credible evidence that leads me to believe that Broadcom Ltd." by acquiring Qualcomm "might take action that threatens to impair the national security of the United States", Trump said in the order released Monday evening in Washington.

Singapore-based semiconductor company Broadcom has been engaging in a hostile takeover bid for Qualcomm, well known to us for their Snapdragon range of processors. Last week the president made official plans to put tariffs on imported steel and aluminum, saying foreign dumping was crippling USA steel and aluminum manufacturers and putting American national security at risk. In late February, Qualcomm became a little bit more receptive to Broadcom's advances (likely an effort to quell investor concerns over maintaining realistic valuation of the company), but still expressed a significant disconnect over the valuation Broadcom placed on the company, and the high probability that the deal wouldn't pass regulatory muster.

Hunter said it could reflect "an evolution in the thinking" of the committee, perhaps an indication that it's going to approach transactions in which foreign people or entities seek to own 5G wireless technology with the same sensitivity and rigour that the feds now "apply to military equipment traditionally".

The fight with the tech giant has weighed on Qualcomm's market value and created the opening for Broadcom.

Broadcom, which had pledged to move all its headquarter functions to the USA if it won the day, said it "strongly disagreed" with the reasoning behind the decision.

The order amounts to a permanent block, declaring that any merger or takeover attempt "substantially equivalent" to the proposed deal is also prohibited.




Qualcomm, which makes most of the world's microprocessors for smartphones, postponed its annual shareholders' meeting after secretly requesting the national security review of Broadcom's bid.

By contrast, some 44% of analysts felt that way about Qualcomm before Broadcom made its first bid for the company in November.

Broadcom CEO Hock Tan had seized on Qualcomm's legal headaches in his attempt to persuade the USA government to keep the deal alive.

This is the fifth time ever a US President has blocked a deal based on CFIUS objections and the second deal Trump has stopped since assuming office, Reuters noted.

Treasury Secretary Steven Mnuchin, in his capacity as the chair of the CFIUS, said Trump's decision was consistent with the administration's commitment to take all actions necessary to protect the national security of the US.

The move by Trump to kill the deal comes only months after the US president himself stood next to Broadcom Chief Executive Hock Tan at the White House, announcing the company's decision to move its headquarters to the United States.

The presidential decision to block the deal can not be appealed. It is not clear whether Broadcom would follow through with its plans of moving Broadcom's headquarters to the United States. "Broadcom's claims that the CFIUS inquiry was a surprise to them has no basis in fact".

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