Published: Tue, March 13, 2018
Money | By Armando Alvarado

White House blocks Broadcom bid to acquire chip maker Qualcomm

White House blocks Broadcom bid to acquire chip maker Qualcomm

In the official executive order statement regarding the proposed takeover Trump has prohibited the takeover as well as prohibited any mergers, acquisitions, or takeovers that are deemed to be "substantially equal" in nature, which essentially means that no deal like this between the two companies will ever take place in the future either.

"It appears CFIUS either found some disturbing things in its investigation or the administration sees [Qualcomm's] technology leadership in 5G and beyond as important to national security", said Moor Insights & Strategy principal analyst Patrick Moorhead in an email to Fast Company.

Claiming that an acquisition of San Diego based Qualcomm by Broadcom is a national security risk, President Donald J. Trump has blocked the transaction from taking place.

"Qualcomm is as integral to our USA military and the NSA (National Security Agency) as it is to our Apple phones just doing civilian calls".

Broadcom's hopes of acquiring Qualcomm might have been quashed for good.

Broadcom, co-founded by Henry Samueli and Henry Nicholas III, was long based in Irvine before it was bought by Singapore-based Avago Technologies in 2015.

Broadcom said its move to the USA meant national security concerns would have no longer been a problem for closing the deal.

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In other words, no one has to be concerned about them moving all the way down like that because it is not going to happen. They were able to do that because they still possess five picks in the Top 64, including No. 1, No. 4, No. 33 and No. 35.

The Treasury Department letter was "obviously a poison pill", said Jim Lewis, a CFIUS expert at the Center for Strategic and International Studies, who described the communication to Broadcom as "unprecedented".

Even though Broadcom is a Singapore-based company, any kind of connection with US information technology information seeping into China was the main concern impacting the president's action. From 2013 to 2015, the latest years for which the committee has made data public, about 20 per cent of the deals that CFIUS reviewed involved investors from China. CFIUS stepped in and through an interim order directed Qualcomm to postpone its board meeting, scheduled for March 6, for 30 days. Broadcom had announced the move in November after Tan met with Trump at the White House. Penn Davis Mcfarland Inc sold 25,088 shares as Qualcomm Inc (QCOM)'s stock rose 2.14%.

Separately, Broadcom said it is reviewing the order, and that it strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.

"I'm particularly glad Broadcom's proposed candidates are prohibited from running for election to Qualcomm's board of directors".

CFIUS also said that Qualcomm has a number of military contracts with the US Department of Defense. 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.

Even as highly publicised deals such as the bid for Qualcomm by Singapore-based Broadcom, a chip maker for Apple and Chinese electronics manufacturers, run into trouble, asset purchases by Chinese buyers are still going through - and mostly out of the public eye, Wall Street deal makers said.

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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