Trump halts Broadcom's $117 bn bid to buy Qualcomm

Trump halts Broadcom's $117 bn bid to buy Qualcomm

President Donald Trump late today quashed Broadcom Ltd.'s $121 billion hostile bid to buy Qualcomm Inc., effectively ending a deal that would have upended the semiconductor industry.

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

Trump acted on a recommendation by the committee on foreign investment in the U.S., which reviews acquisitions of American firms by foreign investors.

Trump's order comes just months after he stood alongside Tan in the White House as the Broadcom chief revealed that the company would be re-domiciling in the U.S.in what the administration touted at the time as a major jobs announcement.

Trump, in his executive order, said there is "credible evidence" that leads him to believe that if Broadcom Limited took control of the US-based Qualcomm it "might take action that threatens to impair the national security of the US".

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

If Broadcom bought Qualcomm, CFIUS argued, it would likely cut costs at the American company and weaken its ability to compete against Chinese rivals like Huawei. Lattice said CFIUS objected to the deal, and the company tried to appeal to the president, offering to resolve national security concerns.

Broadcom, incorporated in Singapore and co-headquartered there and in San Jose, California, denied this.

In a letter to both companies' attorneys last week, the interagency panel said it was concerned that Broadcom's takeover would put at risk USA efforts to build next-generation wireless networks, thereby giving Chinese firms the opportunity to take the lead.

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Broadcom has yet to comment on the CFIUS order.

Broadcomm is now moving its headquarters from Singapore to the United States, where it aims to obtain majority control of Qualcomm's board, and advance its hostile takeover.

The committee told lawyers for the companies in a Sunday letter that their investigation into Broadcom's bid s expected to "close soon" and that "so far", the deal would propose a national security risk, if the deal were to go through.

Broadcom attempted a hostile takeover by purchasing proxy votes to install six friendly board members on Qualcomm's 11-member board when Qualcom rejected the offers. But its responsibilities expanded after a crisis in the 1980s involving - like Qualcomm - an American chip maker: Fairchild Semiconductor, one of the pioneers of Silicon Valley, wanted to sell itself to Fujitsu, a Japanese company.

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

In an effort to alleviate these concerns, Broadcom has been rushing to redomicile (legally move the company) to the United States.

So it would be surprising if CFIUS's authority was overturned at this stage, said Brian Fleming, a lawyer with Miller & Chevalier and former Assistant Attorney General for National Security who managed CFIUS matters for the Department of Justice. These ties were most recently reflected in the agreements Broadcom signed with HBC, Inspur and StarTimes.

Shares of Broadcom were marginally higher at $264.50 a share in after-hours trading.

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