Donald Trump Blocks Broadcom’s Takeover of Qualcomm

Donald Trump blocks Qualcomm Takeover

On Monday afternoon, U.S. President Donald Trump issued an order to block Broadcom Ltd. (NASDAQ:AVGO)’s proposed $117 billion takeover of Qualcomm Inc. (NASDAQ:QCOM), which has been under government scrutiny due to national security concerns. The presidential order stated the following:

“The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether affected directly or indirectly, is also prohibited. There is credible evidence that leads me to believe that Broadcom Ltd., by acquiring Qualcomm, might take action that threatens to impair the national security of the United States.”

In addition, the order also disqualifies all 15 of Broadcom’s proposed directors for Qualcomm.

Enter Your E-mail Address To Subscribe

* indicates required

>>Broadcom Limited Looking to Elect 11 Independent Directors to Qualcomm’s Board

Trump’s order was based on a recommendation by the Committee on Foreign Investment in the United States (CFIUS), a multi-agency panel led by the U.S. Treasury Department that reviews national security implications when foreign entities take over U.S. corporations. The CFIUS argued that should the merger go through, it would weaken the American company’s ability to compete against its Chinese rivals.

The Singapore-based Broadcom has been trying to acquire fellow chipmaker Qualcomm for the past several months, but the proposed merger was met with constant rebuttals. Broadcom is currently in the process of moving its headquarters from Singapore to the U.S., a move expected to be complete by April 3. Now that the order has been issued, it’s unclear whether the company will still redomicile, as this would not make a difference in the proposed merger.

>>Trump Says Broadcom Limited is Moving its Headquarters From Singapore to the U.S.

Today’s order was not the first time that the Trump administration has impeded a major takeover deal. Earlier, the president blocked the sale of Lattice Semiconductor (NASDAQ:LSCC) to a Chinese-backed firm, as well as the sale of money transfer company Moneygram (NASDAQ:MGI) to a company affiliated with Chinese e-commerce giant Alibaba (NYSE:BABA).

Featured Image: twitter