Industry Caught Off Guard After Trump Scuttles Tech Deal

Federico Mansilla
Marcha 14, 2018

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

The decision by President Donald Trump to scuttle a hostile takeover by Singapore's Broadcom of the US chipmaker Qualcomm caught some on Wall Street off guard.

Only five takeovers of American firms have been blocked by USA presidents on national security grounds since 1990.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", it said in a statement in response to the decision. There were concerns the takeover could have led to China pulling ahead in the development of 5G wireless technology. And it could have an easier time buying USA targets if it goes through with plans to redomicile in the United States.

You guys know this already, but Broadcom and Qualcomm have been going back and forth over several months now after Broadcom attempted to acquire the United States chipmaker. "In short, US national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation". He described the CFIUS communication to Broadcom as "unprecedented".

The last deal Mr. Trump blocked was Chinese government-backed Canyon Bridge Capital Partners' attempt to buy Portland, Ore. -based Lattice Semiconductor Corp.

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The White House suggested like there is "credible evidence" that Broadcom and its partners may "take action that threatens to impair the national security of the United States", should they acquire Qualcomm.

Being based in the United States as opposed to Singapore will allow Broadcom to make what it believes will be acquisitions of USA companies that will not fall within the jurisdiction of the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals for potential national security concerns. While Intel is "eager for Broadcom to fail", it could make a play for the company if the merger gained momentum, the Journal said in another report on Friday.

"If Broadcom completes its redomiciling in the a way that extinguishes any non-U.S. ownership or control, then I think they can open the door to many, if not all, acquisitions. they would effectively no longer be subject to a CFIUS-initiated review or investigation", said Guillermo Christensen, a lawyer who works on CFIUS issues at Brown Rudnick in Washington.

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

This item was corrected at 12:32 p.m. ET on Tues., March 13, 2018 to show that A bipartisan group of 22 House members wrote to the Committee on Foreign Investment in the December 2016, not December of past year.

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