Hi-Tech

Trump Was Right to Block a Merger

Trump Was Right to Block a Merger

Broadcom's months-long attempt to takeover Qualcomm is officially over following yesterday's intervention by the White House.

President Donald Trump ordered the Singapore-based company Broadcom to cease its attempts to buy the USA company Qualcomm, for which it had launched a hostile takeover of 117 billion dollars.

Although Broadcom is incorporated and based in Singapore, CEO Hock Tan announced late previous year while visiting Trump at the White House that the company would return its corporate headquarters to the United States, likely using San Jose as a base.

Regardless of President Trump's intentions, his order is certainly unfortunate news for Broadcom as well as Qualcomm's stockholders.

Singapore-based Broadcom said it will continue to move forward with its plans to shift its official headquarters back to the USA and will hold its special shareholder meeting as planned on March 23.




The Singapore-based company also withdrew its list of directors that were nominated for election to Qualcomm's board.

The presidential order said there was "clear evidence" of a U.S. national security concern, with Broadcom able to "take action that threatens to impair the national security of the United States".

"Although we are disappointed with this outcome, Broadcom will comply with the order", the chipmaker said.

Being based in the United States as opposed to Singapore should make it easier for Broadcom to make acquisitions of USA companies without falling under the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS). Rejected by the American chipmaker's board, Broadcom looked to conduct a hostile takeover. It also noted that Broadcom has reduced spending on research and development at the businesses it acquires, a practice that could make Qualcomm less innovative.

CFIUS on March 4 ordered Qualcomm to postpone a shareholder meeting to vote on Broadcom's nominees as directors of the target.


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