Broadcom-Qualcomm Takeover Blocked By White House on National Security Grounds
Stepping into the more and more wild saga that has been Broadcom’s efforts to buy Qualcomm, the US authorities is now weighing in by issuing a brand new order to dam the merger of the 2 corporations. Citing nationwide safety issues with the Singapore-based Broadcom buying the US-based Qualcomm, President Trump issued an order beneath the Defense Production Act of 1950 to ban the proposed acquisition or any related transaction, successfully ending Broadcom’s acquisition efforts.
Given what would have probably been the most important acquisition to this point within the know-how trade, Broadcom’s acquisition efforts had already attracted the eye of Committee on Foreign Investment within the United States (CFIUS), who was investigating the buyout. However in exercising his personal authority based mostly on the CFIUS’s suggestions, the President has blocked the merger on nationwide safety grounds, citing that by way of their possession of Qualcomm, Broadcom “might take action that threatens to impair the national security of the United States.”
As a results of the presidential order, Broadcom’s buy efforts are on maintain in the interim, if not perpetually. The order requires the 2 corporations to right away cease any and all merger exercise, and to unwind any efforts they’ve taken up to now, reporting to the CFIUS on their progress. Furthermore the candidates that Broadcom was operating for Qualcomm’s board of administrators are barred from collaborating in that election, and Qualcomm can’t settle for their nominations.
The President’s order doesn’t go into element concerning the nationwide safety issues he and the CFIUS have with the potential deal. But the Washington Post, citing a letter from the CFIUS despatched to the businesses’ attorneys despatched over the weekend, notes that “it was concerned research and development at Qualcomm might atrophy under Broadcom’s direction” and that Qualcomm rivals similar to Huawei “might become much more dominant around the world” consequently.
As the framework blocking the acquisition is a presidential order, it can’t be appealed and this block is seemingly everlasting. However as Broadcom has already been going by way of nice lengths to accumulate the corporate, together with planning to redomicile to the US in order that the acquisition was not a international deal, it’d but show too early to rule them out fully.