Published: Fri, March 16, 2018
Money | By Hannah Jacobs

Broadcom ends bid for Qualcomm after President Trump nixes deal

Broadcom ends bid for Qualcomm after President Trump nixes deal

The New York Times editorial board agrees with President Donald Trump's decision to block the massive acquisition of US -based Qualcomm by a foreign company, according to an editorial Wednesday.

Federal regulators last week ordered a delay in a vote by Qualcomm stockholders over the proposed sale, with some members of Congress expressing concerns about a foreign interest controlling a domestic firm that performs "sensitive work" on behalf of the US government.

Trump's recent presidential order cited credible evidence that Broadcom might take action through seizing Qualcomm that "threatens to impair the national security of the United States", and ordered Broadcom to immediately withdraw both its bid and director nominees. "Although we are disappointed with this outcome, Broadcom will comply with" Trump's order, the company said in a statement.

Being based in the United States as opposed to Singapore should make it easier for Broadcom to make acquisitions of US companies without falling under the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS). 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.

The move by Trump came despite efforts by Broadcom and its chief executive, Hock Tan, to win over the White House, even before the hostile takeover bid was announced.

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. The committee last week directed Qualcomm to postpone its shareholder meeting so it could investigate the proposed Broadcom takeover to assess whether the deal poses any national security risk. Qualcomm counts several Chinese smartphone makers as clients.

While Broadcom pursues Qualcomm and Intel waits, Qualcomm has also put a cash offer on the table to acquire another chipmaker, Netherlands-based NXP Semiconductors.

The Wall Street Journal reports the company is still planning redomicile to the USA despite the blocking from the President. A few weeks after the visit, when Tan promised to headquarter his company in the U.S., Broadcom announced the acquisition of Brocade was complete on November 17.

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