Broadcom Qualcomm takeover blocked by Trump over national security worries

Broadcom Qualcomm takeover blocked by Trump over national security worries

President Trump has issued an order blocking Broadcom's proposed takeover and anything "substantially equivalent" to it over concerns that it might "impair the national security" of the country.

"By exploiting gaps in the existing CFIUS review process", Cornyn said, "potential adversaries, such as China, have been effectively degrading our country's military technological edge by acquiring, and otherwise investing in USA companies".

The White House statement directs Broadcom and Qualcomm to "immediately and permanently abandon the proposed takeover", and verify in writing to the foreign investment committee that they have indeed terminated the deal and any such variation.

CFIUS is a multiagency panel of the US government that has become more active during the Trump administration. While Broadcom's bid was active, its attempt to buy Qualcomm became the biggest soap opera on Wall Street.

The Singapore-based company has voiced the intention to move its headquarters to the ease concerns over the proposed takeover.

Trump's move accelerated a decision that appeared likely after CFIUS told Broadcom in a letter on Sunday that its investigation "so far confirmed the national security concerns". Pentagon officials insisted on a review of Broadcom's proxy battle, while the USA treasury department had pushed back, according to people familiar with the matter.

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Qualcomm, based in San Diego, California, is viewed as a major rival to Chinese companies vying for market share in the sector, such as Huawei, making the acquisition an important strategic move. But after CFIUS launched an investigation of the hostile takeover, Broadcom began efforts to speed up the relocation to April 3. CFIUS operates pursuant to section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (FINSA) (section 721) and as implemented by Executive Order 11858, as amended, and regulations at 31 C.F.R.

The company first announced its relocations plans in November in a White House ceremony with President Trump.

"I'm glad the president blocked Broadcom's bid and I'm grateful to the administration for acting quickly before Qualcomm's annual meeting", Peters said in a statement.

On Friday, Qualcomm announced executive Paul Jacobs - the son of Qualcomm founder Irwin Jacobs - "will no longer serve in an executive management capacity" but "will continue to serve on the Qualcomm Board". The initial offer was declined by Qualcomm's board of directors, as was every subsequent counter offer. But its responsibilities expanded after a crisis in the 1980s involving - like Qualcomm - an American chip maker: Fairchild Semiconductor, one of the pioneers of Silicon Valley, wanted to sell itself to Fujitsu, a Japanese company.

So it would be surprising if CFIUS's authority was overturned at this stage, said Brian Fleming, a lawyer with Miller & Chevalier and former Assistant Attorney General for National Security who managed CFIUS matters for the Department of Justice. Qualcomm said it would challenge that fine. In after hours trading, shares of Qualcomm sunk as much as 4 percent from its market close of $62.81.

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