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Broadcom ends bid for Qualcomm after President Trump nixes deal
17 March 2018, 01:39 | Gordon Grant
Trump Blocks Broadcom's $117B Takeover Bid For Qualcomm
The New York Times editorial board agrees with President Donald Trump's decision to block the massive acquisition of US -based Qualcomm by a foreign company, according to an editorial Wednesday.
Broadcom has also withdrawn its slate of independent director nominees for Qualcomm's 2018 annual meeting of stockholders.
The Committee on Foreign Investment in the United States, which said over the weekend it had "confirmed" national security concerns, indicated that a Broadcom-Qualcomm merger could weaken Qualcomm's leadership in the field. It added that "given well-known USA national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the U.S".
Respected US media sources said the burgeoning muscle of Chinese company Huawei, whose Cambridge HQ is at the Science Park, alarmed White House trade chiefs who advised the President to block the acquisition on competition grounds.
The growing influence of Huawei is a major factor killing the Qualcomm-Broadcom deal.
Broadcom issued a statement after hearing the White House's decision stating that it "is reviewing the order" and underlining its "total disagreement" with the claim that the proposed transaction represents a problem for USA national security.
Qualcomm continues to fall in the futures market, more than 5%, after collapsing on the eve 4% on the Nasdaq after US President Donald Trump chose to block the acquisition of US microprocessor manufacturer by rival Broadcom, . And if the acquisition had gone through, then it would be the largest technology deal made in the pages of history.
US Government blocks Broadcom's bid to takeover Qualcomm The company has "active sole source classified prime contracts" with the Pentagon, according to a letter from Treasury. There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology.
However, at the end of the day, the White House cited national security reasons in scuttling the deal, namely not wanting Qualcomm to become a foreign-owned company.
But if the decision was prompted by Trump's deep skepticism about global trade and Fortress America instincts, that is less defensible and could haunt USA companies in their worldwide dealings.
Broadcom is based in Singapore, and Qualcomm is based in San Diego, California.
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.
In a letter, the CFIUS had confirmed the national security concerns.
Meanwhile, Broadcom announced today that is has accelerated its timetable for redomiciling its organization from Singapore to the USA, moving up the date from May 6 to April 3.
Broadcom, a chipmaker incorporated in Singapore, was looking to take over Qualcomm, a San Diego-based rival. In September, Trump blocked a Chinese state-owned company from acquiring an American semiconductor firm.
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