Broadcom to end bid for Qualcomm, keeps plan to move to US

Rodiano Bonacci
Marzo 14, 2018

London addressed the Trump administration's blocking of Singapore-based semiconductor manufacturer Broadcom's hostile takeover attempt of USA -based competitor Qualcomm.

Broadcom said it was reviewing the presidential order.

According to London, Trump's decision to black Broadcom's hostile takeover of Qualcomm is part of a broader strategy to ensure global US preeminence in technological innovation.

Qualcomm shares had fallen 5.2 percent to $59.55 at 0930 EDT on March 13, while Broadcom shares rose 1.5 percent to $266.93.

The Committee on Foreign Investment in the United States (CFIUS), which raised concerns about the Qualcomm deal with Trump, listed the highly leveraged nature of Broadcom's bid for its larger rival as a major concern coupled with the risk of the USA losing mobile technology leadership. "Underpinning that is concern about China's growing competitiveness in areas such as 5G and artificial intelligence, which are set to become increasingly important in the next few years", the publication reported.

In its announcement today about the earlier redomiciliation date, Broadcom said it had always planned to complete the move ahead of a planned merger with Qualcomm.

"Given well-known USA national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States", the letter says.

The last deal Mr. Trump blocked was Chinese government-backed Canyon Bridge Capital Partners' attempt to buy Portland, Ore. -based Lattice Semiconductor Corp. CFIUS had told lawyers for the companies in a letter dated Sunday that Broadcom had repeatedly violated its order to provide the panel with five days' notice before taking any action on its redomiciliation plan. The company will also drop its challenge to Qualcomm's board, the people added.

Trump issued an order barring the proposed mega-acquisition, saying there is credible evidence such a deal "threatens to impair the national security of the United States", according to a White House statement.

The move by Mr Trump to kill the deal comes only months after the United States president himself stood next to Broadcom chief executive Tan Hock Eng at the White House, announcing the company's decision to move its headquarters to the U.S. and calling it "one of the really great, great companies".

Now, Mr. Trump's order leaves Broadcom little choice but to move on.

Broadcom shares rose 3.6% Monday to $262.84, and Qualcomm fell 0.35% to $62.81.

Two analysts said Xilinx and Mellanox would be a good fit for Broadcom, though not as transformational as Qualcomm.

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