Trump blocks Broadcom bid to acquire Qualcomm
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 United States by early April, ahead of a previously-planned Qualcomm shareholder vote on the $117 billion deal -- meaning any national security concerns were moot.
The Treasury Department said in a letter over the weekend that Broadcom had violated a Committee on Foreign Investment in the United States order on three separate occasions by failing to give advance notice before taking actions such as lodging 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 U.S. officials, according to the letter.
The rival chip giants were told to notify CFIUS in writing that all aspects of the order had been followed.
A White House official on March 12 confirmed Reuters that the national security concerns related to the risks of Broadcom’s relationship with third party foreign entities.
“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 percent to $262.84 and gained slightly more in after-market trades.
Qualcomm shares sank 4.4 percent to $60.04 in the after-market.
Qualcomm is known for mobile chip innovations that set industry standards, for example in 5G wireless connection technology, he said.
In contrast, he said Broadcom is adept at using intellectual property developed by others and making products at low cost, referring to them as “implementers.”
Moorhead likened the idea of merging the companies to mixing oil and water.