Trump Blocks Qualcomm Sale To Foreign Company For Security Reasons

Hock Tan CEO of Broadcom speaks on the floor of the New York Stock Exchange shortly before the opening bell in New York U.S. February 12

If Broadcom decides to press on with its effort to buy Qualcomm, it would be wise to drop the matter for now while the company quietly wraps up its move to the United States, a second CFIUS expert said. While Broadcom's bid was active, its attempt to buy Qualcomm became the biggest soap opera on Wall Street.

Despite a clampdown on highly public deals, other Chinese acquisitions are going through in sectors such as automobiles that are less closely related to national security and therefore do not require CFIUS approval.

Broadcom has headquarters in Singapore and in Silicon Valley. The committee also ordered Broadcom to give five days notice on any action to expedite the move to become a US company and possibly prevent the committee from having the authority to intervene.

China is said to be the main reason behind Trump's decision, USA daily "The New York Times" said.

This weekend, before Trump's order, Mir wrote the same lawyers again, this time to note that the CFIUS investigation "has so far confirmed the national security concerns" identified in his earlier letter.

"Broadcom's dismissive rhetoric notwithstanding, this is a very serious matter for both Qualcomm and Broadcom", Qualcomm fired back in response.

Broadcom said it was reviewing the presidential order.

Trump's order requires Qualcomm to convene a postponed 2018 stockholders meeting within 10 days.

Karti Chidambaram sent to CBI custody for 3 more days
Earlier in the day, the Delhi High Court granted him interim relief from arrest by the Enforcement Directorate till March 20. Mehta said he was going to seek more time for filing a reply on the bail plea of Karti in the CBI court case against him.

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

Broadcom's relocation was originally scheduled to be completed by May 6. Broadcom had applied to redomicile its business in the United States, an act that would have put it out of the purview of the CFIUS, but did not give the panel the required notice. It also participated in the hearing after CFIUS informed the company that its notice was inadequate.

Companies may challenge CFIUS's jurisdiction in court but may not challenge the inter-agency panel's national security findings, a CFIUS expert said. 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. Just how it will resolve ongoing patent disputes with Apple and an unnamed customer believed to be Huawei remains to be seen. "It is USA military power and economic power going forward and he's got a very consistent point of view", said Ron Napier, head of Napier Investment Advisors.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns", the company said, adding that it was reviewing the order.

Qualcomm rejected Broadcom's $79 per share offer as too low, given its growth prospects from the expansion of cellular technology into other gadgets beyond smartphones and upcoming, ultra-fast 5G networks. "In the case of Qualcomm, this will be 5G cellular".

Singapore-based semiconductor company Broadcom has been engaging in a hostile takeover bid for Qualcomm, well known to us for their Snapdragon range of processors.

Amid all of this was expressed concerned from CFIUS cited above, which indicated that Broadcom's business plans - and in particular its foreign ownership - presented security issues. Qualcomm is now involved in intense litigation with Apple around patents and accusations of anti-competitive behaviour. But Broadcom CEO Hock Tan's real goal was apparently to smooth the road for its hoped-for acquisition of Qualcomm.

Qualcomm shares were down 4.5% in after-hours trading to $59.98, while Broadcom shares were relatively flat at $265.

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