US President Donald Trump on Monday blocked an unsolicited bid by Singapore-based Broadcom to take over smartphone chipmaker Qualcomm, citing national security concerns.
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,” a White House statement said.
The order came despite Broadcom’s assurances that it would complete its move to the US by early next month, ahead of a previously planned Qualcomm shareholder vote on the US$117 billion deal — meaning any national security concerns were moot.
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“Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns,” it said, adding that it was reviewing the order.
The US Department of the Treasury said in a letter over the weekend that Broadcom had violated a Committee on Foreign Investment in the US (CFIUS) order on three separate occasions by failing to give advance notice before taking actions, such as lodging takeover-related securities filings in the US.
A CFIUS investigation of the proposed acquisition so far has “confirmed” national security concerns earlier identified by US officials, according to the letter.
Trump ordered Broadcom and Qualcomm to “immediately and permanently abandon the proposed takeover.”
The rival chip giants were told to notify CFIUS in writing that all aspects of the order had been followed.
Qualcomm has been maneuvering for weeks to rebuff Broadcom’s unwanted advances and had asked CFIUS to look into national security implications of a merger.
Concern over China’s potential influence and rising US protectionist sentiment hung over the Singaporean firm’s hostile takeover bid.
Qualcomm rejected multiple Broadcom offers during weeks of parries and thrusts between the two firms since the proposed deal emerged in November.
CFIUS said that a Broadcom-Qualcomm merger could weaken Qualcomm’s leadership in the field. This would likely help Chinese competitors, such as telecommunications firm Huawei Technologies Co (華為), particularly in the emerging 5G wireless Internet, where a stronger China could present a national security issue.
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