US President Donald Trump stepped in to block Broadcom’s $142 billion hostile takeover of Qualcomm over national security concerns, ending a deal which would have been the biggest ever in the technology sector.
Trump issued an unprecedented presidential order, which was based on a recommendation by the Committee on Foreign Investment in the US (CFIUS).
The order stated: “There is credible evidence that leads me to believe that Broadcom, a limited company organised under the laws of Singapore, along with its partners…through exercising control of Qualcomm, might take action that threatens to impair the national security of the United States.”
Broadcom issued a short statement saying it is reviewing the order and “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.”
In its own statement, Qualcomm said it had been ordered to reconvene a postponed annual stockholders meeting at the earliest available date: based on a required ten-day notice period, this will occur on 23 March. The company noted all directors nominated by Broadcom are prohibited from standing for election.
Broadcom originally nominated 11 potential members to Qualcomm’s board, but subsequently pared the number back to six.
US authorities had raised fears a takeover would hand the initiative in 5G development to China. In early March CFIUS – which is part of the US treasury – ordered a 30-day delay on the Qualcomm shareholder vote, as it as it investigated the proposed deal.
The executive order from the president came despite Broadcom announcing plans to accelerate a move from Singapore to the US to ease concerns a takeover of Qualcomm posed a threat to national security. The Singapore-based chipmaker said it would relocate its official base to the US by end-April at the latest: Reuters reported Broadcom aimed to complete the move by 3 April, two days before Qualcomm was due to hold its postponed shareholder meeting.
Last week Broadcom pledged to make the US a global leader in 5G and set up a $1.5 billion fund to train engineers in future technologies should its attempt to acquire Qualcomm be successful.
Broadcom made its first move on Qualcomm in November 2017 and since amended its offer several times following opposition from Qualcomm’s management: the latest bid stood at $79 per share.