Broadcom Abandons Qualcomm Takeover Bid After Donald Trump Blocked The Deal Over National Security

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Mar 14, 2018
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The White House has taken actions against a major corporate deal that could potentially give China an influential edge in global technology. President Donald Trump has blocked a planned takeover of the Qualcomm chipmaker by the Singapore-based rival Broadcom over national security. The order indicated “clear evidence” that the proposed $140 billion deal “threatens to impair the national security of the US”. In contrast to this, Broadcom has dropped its bid for Qualcomm takeover. So let’s dive in to see some more details on the matter.

Broadcom Retreats Ambitions To A Potential Qualcomm Takeover As Donald Trump Bans The Deal

The decision to abandon the takeover bid for Qualcomm Inc. comes after the President of the United States, Donald Trump blocked the deal on the bases of national security. Late Monday, Broadcom said in a statement regarding the order that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.”

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Qualcomm rejected Broadcom’s hostile takeover bid which would have combined the two computer chip makers. The takeover was under investigation by the Committee on Foreign Investment in the U.S (CFIUS). The agency operated under the Treasury Department and examines deals or takeovers that could potentially give a foreign investor control of the business in the United States.

The investigation confirmed threats related to national security. Treasury Department further sent a letter to both, Broadcom and Qualcomm which was made public on the 12th of March. Later on, recommendations by the committee made Trump ban the deal.

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The company said that “Although we are disappointed with this outcome, Broadcom will comply,” Furthermore, Broadcom also stated that it will continue with its plans to shift its headquarters back to the United States. In addition to this, the company has also forgone its work for independent director nominees for the target’s board.

The company launched its bid for the takeover back in November of last year and was spontaneously and repeatedly rejected by Qualcomm’s board and management. Broadcom gathered in support from investors to overcome the resistance of the target in favor of a potential deal.

Broadcom targetted control of the board so it could move forward in the takeover business. However, on March 4, CFIUS ordered Qualcomm to postpone a shareholder meeting in order to vote on nominees of Broadcom as directors of the takeover. The agency further stated that the Defence Department in the United States relies on Qualcomm’s products, based in San Diego. According to a letter from the Treasury, the company has “active sole source classified prime contracts.”

There will be more to the story, so be sure to stay tuned. Moreover, share your thoughts on the ending of a potential Qualcomm.

Source: Bloomberg

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