TRUMP BLOCKS BROADCOM’S US$117B BID FOR QUALCOMM
President cites national security concerns in barring proposed US$117b acquisition
PRESIDENT Donald Trump on Monday blocked an unsolicited bid by Singapore-based Broadcom to take over smartphone chipmaker Qualcomm, citing national security concerns.
Trump issued an order barring the proposed mega-acquisition, saying there was credible evidence such a deal “threatens to impair the national security of the United States”, according to a White House statement.
The order came despite Broadcom’s assurances that it would complete its move to the US by early next month, ahead of a previously-planned Qualcomm shareholder vote on the US$117 billion (RM456.9 billion) deal — meaning any national security concerns were moot.
“Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns,” said the company, adding that it was reviewing the order.
The Treasury Department said in a letter over the weekend that Broadcom had violated a Committee on Foreign Investment in the United States (CFIUS) order on three separate occasions by failing to give advance notice before taking actions such as lodging takeover-related securities filings in the United States.
A CFIUS investigation of the proposed acquisition so far had “confirmed” national security concerns earlier identified by US officials, according to the letter.
Trump ordered Broadcom and Qualcomm to “immediately and permanently abandon the proposed takeover”.
The rival chip giants were told to notify CFIUS in writing that all aspects of the order had been followed.
“This deal was a bad idea from the start,” said analyst Patrick Moorhead of Moor Insights and Strategy.
Qualcomm has been manoeuvring for weeks to rebuff Broadcom’s advances, and had asked CFIUS to look into national security implications of a merger.
Concern over China’s potential influence, and rising US protectionist sentiment, hung over the Singapore firm’s hostile takeover bid.
Qualcomm rejected multiple Broadcom offers during weeks of parries and thrusts between the two firms since the proposed deal emerged in November.
CFIUS noted that a BroadcomQualcomm merger could weaken Qualcomm’s leadership in the field.
This would likely help Chinese competitors such as telecommunications firm Huawei, particularly in the emerging 5G blazing fast wireless Internet, where a stronger China could present a national security issue.