Trump blocks Qualcomm's acquisition

Trump blocks Qualcomm's acquisition

Trump blocks Qualcomm's acquisition

President Trump's decision yesterday to effectively block Broadcom's $117 billion proposed takeover of Qualcomm on national security grounds confirmed what had become increasingly apparent in recent days - that the USA authorities had taken a dim view of the deal and the prospect of a foreign company buying America's undoubted leader in wireless technology.

If a hostile takeover to which Broadcom was willing to spend us $ 117 billion, took place, it would be the largest deal in the entire history of the high-tech industry, writes Ars Technica.

Earlier this month, the committee branded the proposed deal a potential security risk that could hobble the U.S.'s ability to make the smooth and quick transition to 5G. A week earlier against the deal, spoke to the Committee on foreign investment of the Ministry of Finance of the United States. Currently, the company is still based in Singapore, despite having a massive presence in San Jose, California.

However, while acknowledging that national security concerns about the deal were "defensible", the San Diego Union-Tribune in an editorial today questioned whether other motivations also played into the decision. "Given Broadcom's public disclosures about the redomiciliation process since last November, as well as its direct communications to CFIUS, Broadcom has been fully transparent with CFIUS about the redomiciliation process, and believes it is in full compliance with the March 4 Interim Order".

Specifically, the order prohibited Broadcom's takeover of Qualcomm, or any substantially similar merger, and any of the 15 listed Broadcom candidates from standing for election as directors of Qualcomm.

Broadcom said in a statement: "Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

Interestingly, Qualcomm itself had appealed to the CFIUS to block the acquisition on the grounds that Broadcom's offer severely undervalued the company and the final acquisition would likely also face major antitrust challenges.

"We'll see if there is anything else Broadcom can do to fight but given a likely long timeframe for a battle, and the fact that (U.S. government panel) CFIUS seems so arrayed against them, we suspect they may be near the end of their rope", Bernstein analyst Stacy Rasgon said.

At face value, that argument doesn't hold water, given that Broadcom will very soon be a USA company.

The order quashing the Broadcom-Qualcomm deal is being met with a wide range of reactions.

Qualcomm has made big investments in the 5G research. Qualcomm's commitment to R&D into the technology is virtually unparalleled in the industry, except perhaps by Huawei.

Should that happen, Chinese companies such as Huawei, which the CFIUS has previously expressed concerns about, could take a larger, or even a dominant, role in setting 5G technology and standards and practices. In September, Trump blocked a Chinese state-owned company from acquiring an American semiconductor firm. "The government is being very careful to ensure the US keeps its leadership role developing these standards". The U.S. authorities also recently blocked a proposal by Alibaba's Ant Financial to acquire the money transfer firm Moneygram.

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