Trump Blocks Bid by Broadcom, Citing Security Concerns

BEIJING CHINA Chinese policemen surf the Internet at a computer fair in Beijing 21 August 2000. China has recently arrested a high school teacher in the southwestern province of Sichuan for posting articles critical of the communist authorities on the


San Diego-based Qualcomm evolved from a USA military aerospace contractor to become the dominant player in wireless radio technology over the past two decades, with its chips used in half of all smartphones.

US President Donald Trump has blocked a planned takeover of chipmaker Qualcomm by Singapore-based rival Broadcom on grounds of national security.

Only five takeovers of American firms have been blocked by USA presidents on national security grounds since 1990.

The president issued an order to block the $117 billion Qualcomm buyout, effectively killing what could have been among the biggest tech deals in history.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", the company said, adding that it was reviewing the order. Well, other than advancing 5G technology development at a rapid pace.

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The cash-and-stock bid, which Qualcomm had rejected, was under investigation by the U.S. Committee on Foreign Investment in the United States, a multi-agency panel led by the Treasury Department that reviews the national-security implications of acquisitions of U.S. corporations by foreign companies.

"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.

You guys know this already, but Broadcom and Qualcomm have been going back and forth over several months now after Broadcom attempted to acquire the USA chipmaker.

CFIUS, which raised concerns about the Qualcomm deal with Trump, listed the highly leveraged nature of Broadcom's bid for its larger rival as a major concern coupled with the risk of the USA losing mobile technology leadership.

This is the fifth time a U.S. president has blocked a deal based on CFIUS objections and the second deal Mr Trump has stopped since assuming office. He described the CFIUS communication to Broadcom as "unprecedented". While Intel is "eager for Broadcom to fail", it could make a play for the company if the merger gained momentum, the Journal said in another report on Friday.

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Two analysts said Xilinx and Mellanox would be a good fit for Broadcom, though not as transformational as Qualcomm.

Others have said Trump's decision was more about competitiveness than security concerns.

Shares of Broadcom were last up 1.4 per cent in midday trading.

This item was corrected at 12:32 p.m. ET on Tues., March 13, 2018 to show that A bipartisan group of 22 House members wrote to the Committee on Foreign Investment in the December 2016, not December of a year ago.

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