Coverage: Trump blocks Broadcom deal for Qualcomm
President Donald Trump issued an executive order on Monday blocking Broadcom Ltd. from acquiring Qualcomm Inc., scuttling a $117 billion deal that had been subject to U.S. government scrutiny on national security.
David McLaughlin of Bloomberg News had the story:
The president acted on a recommendation by the Committee on Foreign Investment in the U.S., which reviews acquisitions of American firms by foreign investors. The decision to block the deal was unveiled just hours after Broadcom Chief Executive Officer Hock Tan met with security officials at the Pentagon in a last-ditch effort to salvage the transaction.“There is credible evidence that leads me to believe that Broadcom Ltd.” by acquiring Qualcomm “might take action that threatens to impair the national security of the United States,” Trump said in the order released Monday evening in Washington.Trump’s order came after an investigation by CFIUS, which had said that Broadcom’s acquisition would undermine Qualcomm’s leadership in 5G wireless technology, opening the door for China’s Huawei Technologies Co.to become dominant.
There is “credible evidence,” the order says, that if the Singapore-based Broadcom took control of the US-based Qualcomm that the company “might take action that threatens to impair the national security of the United States.”
Broadcom has been trying to purchase Qualcomm for the last several months, but has continually been rebuffed. It’s since tried to stack Qualcomm’s board with friendly members. Trump’s order says that Broadcom will not be allowed to purchase or merge with Qualcomm in any way, and that all of the people Broadcom has proposed to Qualcomm’s board are disqualified.
It seems that Broadcom was aware that Trump or his Justice Department might attempt to block the merger on these grounds and has been trying to avoid it. Trump has blocked similar takeovers before, having stopped a Chinese state-owned company from buying an American semiconductor firm back in September.
Jessica Guynn and Mike Snider of USA Today reported that Broadcom is in the process of moving to the U.S.:
Broadcom, currently based in Singapore, is in the process of relocating its legal headquarters to the United States in an effort to assuage those concerns.
“There is credible evidence that leads me to believe that Broadcom Ltd.” in taking over Qualcomm “might take action that threatens to impair the national security of the United States,” Trump said in the order released Monday night.
Trump hosted Tan in the White House last year as he announced the move to the U.S. planned for April.
This isn’t the first time on President Trump’s watch that a deal by a foreign buyer has been scrapped after review by the Committee on Foreign Investment in the United States. Moneygram’s sale to Alibaba’s Ant Financial and Lattice Semiconductor’s sale to an investment firm with reported ties to the Chinese government also were blocked, underscoring the protectionist posture of the Trump administration.