US President Donald Trump Halts Broadcom Takeover Of Qualcomm

US President Donald Trump Halts Broadcom Takeover Of Qualcomm

US President Donald Trump Halts Broadcom Takeover Of Qualcomm

Citing national security concerns with the Singapore-based Broadcom acquiring the US-based Qualcomm, President Trump issued an order under the Defense Production Act of 1950 to prohibit the proposed acquisition or any similar transaction, effectively ending Broadcom's acquisition efforts.

President Trump on Monday blocked Broadcom's bid for the chip maker Qualcomm, citing national security concerns.

The president acted on a recommendation by the Committee on Foreign Investment in the USA, which reviews acquisitions of American firms by foreign investors.

In the released executive order, President Trump affirms "credible evidence" exists, which suggests Broadcom "might take action that threatens to impair the national security of the United States", following the acquisition of Qualcomm.

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Broadcom has been trying to purchase Qualcomm for the last several months, but has continually been rebuffed. After CFIUS announced its March 4 decision to investigate the bid, Broadcom has been trying contact Congress as to why the deal isn't a risk to national security, and Qualcomm on its part appointed a new independent chairman.

CFIUS experts are uncertain whether the agency's authority extends to acquisitions involving two USA based firms - though CFIUS has already asserted jurisdiction and launched its probe while Broadcom remains headquartered in Singapore. Pentagon officials insisted on a review of Broadcom's proxy battle, while the United States treasury department had pushed back, according to people familiar with the matter.

As Broadcom sought to elect its own slate of directors to Qualcomm's board, the run-up to an aborted shareholder meeting made clear how dissatisfied investors have become with Mollenkopf. Neither company responded immediately to a request for comment. These ties were most recently reflected in the agreements Broadcom signed with HBC, Inspur and StarTimes. At a White House event with the CEO, Hock Tan, he called Broadcom "one of the great, great companies".

We knew that Broadcom's hostile takeover of Qualcomm was on thin ice, especially considering that the latter thought that the former's offers have greatly undervalued the company.

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Mr Trump had earlier used his veto powers to scuttle the Chinese government-backed Canyon Bridge Capital Partners' attempt to buy the Lattice Semiconductor Corp in September.

CFIUS also would need to weigh that Qualcomm provides sensitive products to the US Defence Department, has a dominant role in US telecommunications infrastructure and performs significant research and development, Griner said.

Under the order, both Broadcom and Qualcomm must report to CFIUS every week indicating their compliance with the order, that including descriptions of their work in completely and permanent terminating the takeover plans.

Only a few days ago, Broadcom's buyout bid was of such high concern to lawmakers that they asked federal regulators to review the proposed $117 billion deal-and unusual move considering the two companies haven't come to terms on a buyout deal.

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Qualcomm's shares dipped 22 cents to close at $62.81 on Monday, while Broadcom's shares gained 3.5 percent to end the day at $262.84 on the Nasdaq.

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