Trump blocks Singapore-based Broadcom’s bid to buy Qualcomm
SAN FRANCISCO: US President Donald Trump yesterday blocked an unsolicited bid by Singapore-based Broadcom to take over smartphone chipmaker Qualcomm, citing national security concerns.
Mr Trump issued an order barring the proposed mega-acquisition, saying there is 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 planned Qualcomm shareholder vote on the US$117 billion (S$153.7 billion) deal - meaning any national security concerns were moot.
"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns," the company said, 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 filing takeover-related securities filings in the United States.
A CFIUS investigation of the proposed acquisition so far has "confirmed" national security concerns earlier identified by US officials, according to the letter.
Mr Trump ordered Broadcom and Qualcomm to "immediately and permanently abandon the proposed takeover."
"This deal was a bad idea from the start," said analyst Patrick Moorhead of Moor Insights and Strategy.
Broadcom shares closed the trading day up 3.5 per cent to US$262.84 and gaining slightly more in after-market trades.
Qualcomm shares sank 4.4 per cent to US$60.04 in after-market trades.
Qualcomm has been manoeuvring for weeks to rebuff Broadcom's unwanted advances, and had asked CFIUS to look into national security implications of a merger amid a climate of concern over China's potential influence and rising US protectionist sentiment.
It rejected multiple Broadcom offers during weeks of parries and thrusts between the two firms since the proposed deal emerged last November.
The company, which makes most of the world's microprocessors for smartphones, postponed until April 5 an annual shareholders' meeting after secretly requesting a national security review of Broadcom's bid.
CFIUS noted that a Broadcom-Qualcomm 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. - AFP