US President Donald Trump has blocked Broadcom’s bid for Qualcomm on grounds of national security, putting an end to what would have been the technology industry’s biggest deal ever.
Trump issued an order on Monday prohibiting Singapore-based Broadcom from pursuing its hostile attempt to buy Qualcomm, Reuters reports.
“The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” the presidential order said, according to the report.
Qualcomm had rebuffed Broadcom’s US$117 billion takeover bid, which was under investigation by the Committee on Foreign Investment in the United States (CFIUS), a multi-agency panel that reviews the national security implications of acquisitions of US corporations by foreign companies.
The order issued by the White House cited “credible evidence” that led Trump to believe that Broadcom’s control of Qualcomm could “impair the national security of the United States.”
This is the fifth time ever a US President has blocked a deal based on CFIUS objections and the second deal Trump has stopped since assuming office, Reuters noted.
Trump’s move accelerated a decision that appeared likely after CFIUS told Broadcom in a letter on Sunday that its investigation “so far confirmed the national security concerns.”
In the latter, CFIUS told lawyers for the firms that Broadcom had repeatedly violated one of its orders in its pursuit of Qualcomm and that its investigation “so far” confirmed the national security risks it had previously identified with the proposed merger, according to the Wall Street Journal.
CFIUS already said it was worried that Broadcom, which is known to focus on cost-cutting, would stymie research and development at San Diego-based Qualcomm, and weaken it against foreign rivals racing to develop next-generation wireless technology, such as China’s Huawei Technologies.
In the letter, a Treasury official said CFIUS accelerated its investigation into the bid in light of Broadcom’s violations of the panel’s earlier order. That had required the company to provide CFIUS with five business days’ notice before taking any action toward redomiciling in the US.
Broadcom on March 6 applied for a court hearing in Singapore regarding the redomiciliation plan, according to the Journal.
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