Trump blocks Broadcom's takeover bid for Qualcomm

U.S. President Donald Trump blocks Broadcom takeover of Qualcomm

"The proposed takeover of Qualcomm by the purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited", the order added.

This is now at least the third prominent deal that has fallen apart under CFIUS scrutiny during the Trump administration.

"Qualcomm has become well-known to, and trusted by, the USA government", the Treasury Department said in a March 6 letter.

Trump's decision to block Broadcom's pursuit of Qualcomm initially sent shares of the acquirer lower, but then they rebounded.

This weekend, before Trump's order, Mir wrote the same lawyers again, this time to note that the CFIUS investigation "has so far confirmed the national security concerns" identified in his earlier letter.

Qualcomm is one of the San Diego area's largest private employers, and the family of co-founder Irwin Jacobs is one of the area's most generous philanthropists.

US President Gerald R Ford signed an executive order creating Cfius in 1975, mainly as a vehicle to study foreign investment.

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Trump hosted Broadcom CEO Hock E. Tan in the White House a year ago when the executive announced the proposed move.

A move by Chinese companies to fill the void left by the proposed Qualcomm acquisition and dominate the making of 5G chips permitting faster data transmission would have significant security implications for the United States, the panel found. Jnba Financial Advisors holds 0.19% of its portfolio in QUALCOMM Incorporated (NASDAQ:QCOM) for 16,117 shares. "The transfer of Qualcomm's technology innovations includes its strides toward 5G to a foreign company posed a real danger to national security", American for Limited Government President Rick Manning said in a statement. "All 15 individuals listed as potential candidates on the Form of Blue Proxy Card filed by Broadcom ... are hereby disqualified from standing for election as directors of Qualcomm".

Broadcom said in a statement it was reviewing the order and that it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

The Treasury Department, which leads CFIUS, had said the Qualcomm deal raised red flags because it threatened Qualcomm's leadership in developing the next generation of wireless technology. While Qualcomm isn't likely to complain much given that it repeatedly rejected Broadcom's bids as undervalued, Broadcom now faces the prospect of having to either look at another acquisition target or accept that it will have to tackle 5G by itself.

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.

Yet the unsolicited takeover bid was just the most immediate in a long list of challenges for Qualcomm, which also include legal disputes with customer Apple Inc, a decline in profit and a regulatory assault on its licensing business, all of which have eroded faith in Chief Executive Officer Steve Mollenkopf.

Qualcomm shares were down 4.5% in after-hours trading to $59.98, while Broadcom shares were relatively flat at $265.

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