Trump Blocks Broadcom's $117B Takeover Bid For Qualcomm

Trump Blocks Broadcom's $117B Takeover Bid For Qualcomm

But it will not be their death knell.

Qualcomm rejected Broadcom's $79 per share offer as too low, given its growth prospects from the expansion of cellular technology into other gadgets beyond smartphones and upcoming, ultra-fast 5G networks.

Congressman Duncan Hunter said that the merger would "damage American security" and had pointed at Broadcom's "increasing" ties with China to highlight his reservation about the deal.

The Treasury Department said last week in a letter to lawyers involved in the deal that Qualcomm was trusted by the USA government and cited Huawei as a competitive threat in the development of 5G, which is a telecommunications standard that will allow for faster transfer of data.

According to Bloomberg, President Trump's executive order follows the recommendation of the "Committee on Foreign Investment in the US" (CFIUS), which analyses the purchase of American companies by worldwide investors. "They would just have to buy Huawei (equipment)". CFIUS on Monday recommended that the president veto the deal.

"We'll have to see if management change is in the offing - it looks like investor confidence in management is low", said Stacy Rasgon, an analyst at Sanford C. Bernstein.

The American government's increased scrutiny of foreign transactions generally has made it more hard for Chinese companies to buy U.S. assets, analysts have said. Qualcomm shares slipped by $2.71, or slightly more than 4 percent, to $60.04 a share. For its part, Broadcom said it's reviewing the order and strongly disagrees that the deal raises national-security concerns.

Ant Financial is affiliated with Alibaba Group Holding, which owns the South China Morning Post.

The order issued by the White House cited "credible evidence" that led Trump to believe that Broadcom's control of Qualcomm could "impair the national security of the United States".

Broadcom contends it is already a USA company "in all important respects" and has won CFIUS approval for previous acquisitions.

Broadcom Chief Executive Hock Tan met earlier Monday with CFIUS officials to make its case to be allowed to pursue an acquisition of Qualcomm. It is being highly publicised. It is now based in Singapore.

Trump noted the company already employed over 7,500 workers in the United States and said: "We are looking forward to seeing that number grow very substantially". If a deal was going to get blocked, sooner is better than later.

Acquisitions in the hi-tech space remain among the most challenging and are likely to receive a tougher review than others.

"The Chinese are stealing everything that we have right now".

Much of the decline was attributable to Beijing's regulatory crackdown on outbound capital flows, the report said.

This evening, Republican Duncan Hunter went on the Fox News show "The Story with Martha MacCullum" to speak about the issue of Broadcom being a national security threat.

The Trump Adminstration's move reportedly shows the high value of the U.S. on maintaining the domestic edge in the technological development. Broadcom had applied to redomicile its business in the USA, an act that would have put it out of the purview of the CFIUS, but did not give the panel the required notice. It had been under investigation by the Committee on Foreign Investment in the United States, or CFIUS.



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