Singapore-based Broadcom said on Wednesday, March 14, it was abandoning efforts to take over U.S. smartphone chipmaker Qualcomm, two days after its bid was blocked by President Donald Trump over national security concerns.
President Trump's order prohibiting Broadcom from taking over Qualcomm is all about China, especially Huawei.
Trump, in his executive order, said there is "credible evidence" that leads him to believe that if Broadcom Limited took control of the US-based Qualcomm it "might take action that threatens to impair the national security of the US".
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"Although we are disappointed with this outcome, Broadcom will comply" with the order blocking its effort to buy Qualcomm, it said in a statement. "The importance of @Qualcomm's research into 5G technology and how it relates to our future can not be understated". At a price tag of more than $100 billion, the acquisition would have been the largest ever technology transaction.
Further, Donald Trump ordered that both Qualcomm and Broadcom must "immediately and permanently abandon the proposed takeover".
Broadcom unveiled its bid for Qualcomm, based in San Diego, in November, but has consistently been rebuffed.
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The editorial board notes, however, that Trump could use his authority to block foreign acquisitions of USA companies to further protectionist aims.
Trump's decision to block the Broadcom acquisition of Qualcomm could spell trouble in the future.
Meanwhile, Broadcom announced today that is has accelerated its timetable for redomiciling its organization from Singapore to the US, moving up the date from May 6 to April 3. At one point, the company also offered to raise its offer for Qualcomm, and when CFIUS first raised concerns about the deal, Broadcom sent a letter to lawmakers promising it would not slow research and development in 5G networking technology if the merger were approved.
Broadcom is also withdrawing a proposed slate of nominees to Qualcomm's board of directors.
Broadcom had been pursuing Qualcomm for about four months. Not long after, the Trump administration scuttled Alibaba-affiliated Ant Financial's bid to acquire Dallas-based fintech company MoneyGram International. In September, Trump blocked a Chinese state-owned company from acquiring an American semiconductor firm.
Also, a few months back, Huawei said it failed to strike a deal with a US carrier (believed to be AT&T) to sell its smartphones.