Trump blocks Broadcom's takeover of Qualcomm

13 March, 2018, 11:18 | Author: Diane Mills
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"The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover", the order reads.

Qualcomm has emerged as one of the biggest competitors to China's Huawei Technologies in the semiconductor sector.

"I have seen San Diego defense companies suffer massive theft of intellectual property by agents of China's government and the defense industrial complex with which it is inextricably entwined", Hunter said in a release.

According to the US-based media reports, the merger would have put one of the largest mobile chipmakers in the U.S. in the hands of an asia-based company, a region that has been racing against American companies over years to develop the next generation of mobile technology.

Precisely, the US administration is fearing that Huawei Technologies will dominate the 5G and other wireless technology market if Broadcom buys Qualcomm.

The White House crushed Broadcom's bid for Qualcomm, declaring the deal can not go due to national security concerns.

CFIUS disclosed that it was looking at "the risks associated with Broadcom's relationships with third party foreign entities", as well as the "national security effects of Broadcom's business intentions with respect to Qualcomm", according to the memo, which was written by a Treasury Department official.

Trump chose to squelch Broadcom's bid on the recommendation of the Committee on Foreign Investment in the United States, which reviews foreign purchases of US entities.

In a letter, the CFIUS had confirmed the national security concerns.

The notice was required as part of CFIUS's order postponing Qualcomm's annual shareholder meeting, previously scheduled for March 6, for 30 days to it could investigate.

The US has expressed national security concerns recently over Chinese telecommunications giant Huawei presence in the US market and this appears to have been a factor in the decision.

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"The CFIUS process focuses exclusively on identifying and addressing national security concerns".

Also adding to the drop in successful deals is Chinese buyers' continuous lack of awareness of United States national security issues and the need to tackle them upfront, deal makers pointed out.

Had it gone through, the acquisition would have been the largest technology deal in history, the New York Times said in a report.

While initially founded in the U.S., Broadcom reincorporated in Singapore in 2016 after it was sold to Avago.

"Being a Singaporean company that has connections to China is just one part of the USA national security consideration", he said.

"This should concern us as a nation".

Broadcom is offering $79 per share in a deal worth over $100 billion to acquire the wireless pioneer.

Broadcom attempted a hostile takeover by purchasing proxy votes to install six friendly board members on Qualcomm's 11-member board when Qualcom rejected the offers.

The Trump administration nevertheless balked at the prospect of a prominent USA chipmaker being owned by a foreign company, particularly at a time countries around the world are gearing up to build ultra-fast "5G" mobile networks that could tip the balance of power in technology.

Senator Tom Cotton said that Qualcomm's work is too important to the US' national security to let it fall into the hands of a foreign company-and in a hostile takeover no less.

Hunter said it could reflect "an evolution in the thinking" of the committee, perhaps an indication that it's going to approach transactions in which foreign people or entities seek to own 5G wireless technology with the same sensitivity and rigour that the feds now "apply to military equipment traditionally".



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