Trump blocks Broadcom's attempted takeover of Qualcomm

Trump blocks Broadcom's attempted takeover of Qualcomm

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

This isn't the first time that President Trump has used his power to block foreign investment into a USA company.

President Donald Trump hugs Broadcom CEO Hock Tan as Tan announces the repatriation of his company's headquarters to the United States from Singapore during a ceremony in the Oval Office of the White House on November 2, 2017 in Washington, DC.

The President cited national security concerns in a White House statement, which read in part, "There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom)... through exercising control of Qualcomm Incorporated (Qualcomm), a DE corporation, might take action that threatens to impair the national security of the United States". Before waiting for an actual deal, CFIUS opened an investigation to review the risks to national security. Last week, Trump also cited national security concerns in announcing a series of harsh tariffs on steel and aluminum imports, a move that hit rivals such as China as well as allies such as Germany and South Korea.

The Treasury Department letter was "obviously a poison pill", said Jim Lewis, a CFIUS expert at the Center for Strategic and International Studies, who described the communication to Broadcom as "unprecedented".

In an unusual step, President Trump has signed an executive order blocking Broadcom's $117 billion bid to buy Qualcomm.

All 15 individuals listed as potential candidates on the Form of Blue Proxy Card filed by Broadcom and Broadcom Corporation with the Securities and Exchange Commission on February 20, 2018 (together, the Candidates), are hereby disqualified from standing for election as directors of Qualcomm.

Buying Qualcomm would make Broadcom the third-largest chip maker, behind Intel Corp. and Samsung Electronics Co.

Microchip
Image The US feared a deal could have harmed America’s ability to compete against Chinese tech rivals

An investigation of the deal by the CFIUS had confirmed national security threats related to the Qualcomm acquisition by Broadcom, Treasury said in the letter. Qualcomm did not respond to a request for comment.

Qualcomm rejected Broadcom's $79 per share offer as too low, given its growth prospects from the expansion of cellular technology into other gadgets beyond smartphones and upcoming, ultra-fast 5G networks.

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.

"Qualcomm is as integral to our US military and the NSA (National Security Agency) as it is to our Apple phones just doing civilian calls".

Broadcom contends it is already a USA company "in all important respects" and has won CFIUS approval for previous acquisitions.

In the coming days or weeks after Broadcom's legal counsel has reviewed their options, we're bound to hear a more extensive response, so stay tuned.

Qualcomm shares were down 4.5% in after-hours trading to $59.98, while Broadcom shares were relatively flat at $265.

Trump hails GOP candidate in special PA election
Lamb , however, keeps to party orthodoxy on unions in a district with a long history of coal mining and steel-making. Such attitudes will be the difference should Saccone emerge victorious.

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