Broadcom's proposed Qualcomm bid blocked on security grounds

Broadcom's proposed Qualcomm bid blocked on security grounds

Broadcom's proposed Qualcomm bid blocked on security grounds

It would also have been the biggest takeover in the technology sector.

The successful acquisition of closely held USA firms by private Chinese companies in quiet, largely undisclosed transactions indicates that extreme pessimism is unwarranted, according to the deal makers.

Broadcom's market value is about 16% higher than Qualcomm's despite an annual revenue base that's about 20% smaller.

Trump justifies the blockade for the "threats" posed by the operation to national security, according to the statement made public by the White House two hours after the closure of Wall Street.

That conclusion may seem extreme given that Broadcom is based in Singapore - and looking to redomicile to the US, where it conducts most of its operations - but it's not a fear of the Southeast Asian city state that is raising national security concerns.

The Committee of Foreign Investment in the USA, a panel that evaluates takeovers by foreign entities of United States companies, had indicated earlier that it might recommend to Trump that he take this very action, according to a report in The Wall Street Journal.

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On Monday, Tan went to the Pentagon to meet with CFIUS officials in a bid to address their Qualcomm concerns.

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

So it would be surprising if CFIUS's authority was overturned at this stage, said Brian Fleming, a lawyer with Miller & Chevalier and former Assistant Attorney General for National Security who managed CFIUS matters for the Department of Justice.

Several analysts said the United States government is growing concerned that Huawei will develop such technologies nearly as fast as their American counterparts, narrowing the gap between Chinese and USA companies.

"The CFIUS process focuses exclusively on identifying and addressing national security concerns". Broadcom also promised not to sell off any "critical national security assets" to foreign firms.

In fact, this isn't the first time Trump has disallowed a chip industry deal, again on national-security grounds.

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"This should concern us as a nation". But the CEO of Broadcom is known for its persistence and improved its offer in the following months, trying to win over investors.

With Broadcom offering more than $120 billion to purchase Qualcomm, there is little doubt Qualcomm would have felt a massive squeeze after the purchase as Broadcom worked to recoup their investment.

The Trump administration nevertheless balked at the prospect of a prominent us chipmaker being owned by a foreign company, particularly at a time countries around the world are gearing up to build ultra-fast "5G" mobile networks that could tip the balance of power in technology.

"The president has been very clear about wanting to take care of competition within the United States and having tech companies stronger and stronger", she added.

Trump and his administration have said that Qualcomm's role in moving America to the next generation of cellular communications called 5G is too critical to the health of the nation and its economy to tolerate any foreign interference. "Better to keep it in American hands and protect American national security", Cotton said.

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