Broadcom abandons plans to buy Qualcomm after Trump blocks the deal

Trump blocks Broadcom from acquiring Qualcomm

Broadcom was trying to acquire Qualcomm in a $117-billion deal

Concern over China's potential influence, and rising U.S. protectionist sentiment, hung over the Singaporean firm's hostile takeover bid. Smaller acquisitions should also be much more straightforward to conclude for Broadcom which is estimated to have over $10 billion in cash reserves that could go a long way in the industry even though that figure faded in comparison to its $117 billion bid for Qualcomm. CFIUS's concerns over the deal are said also to stem from Broadcom's ties to Huawei, which was blacklisted in 2012 along with ZTE when the U.S. House Intelligence Committee cited security risks posed by the companies. Treasury Department further sent a letter to both, Broadcom and Qualcomm which was made public on the 12th of March.

"Although we are disappointed with this outcome, Broadcom will comply", the company said in a statement, bringing an official end to a months-long battle to land the technology industry's biggest ever deal. The agency also claimed that the deal would enable Huawei and other Chinese telecommunications companies to displace Qualcomm as leaders in 5G.

As such, Broadcom and Qualcomm "shall immediately and permanently abandon the proposed takeover", ordered the US President.

Trump said that the government had come across "credible evidence" that a merger between the two companies "threatens to impair the national security of the US".

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Qualcomm (QCOM) shares were down 5% Tuesday to $59.70, about where the stock has remained since Broadcom's bid announced in November.

He added the government is not trying to "make any other statement about Broadcom or its employees, including its thousands of hard-working and highly skilled USA employees".

Broadcom has been pursuing Qualcomm for quite some time now.

One explanation appears to be inherent suspicion of Broadcom amongst the "powers that be" in the US.

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Broadcom hit back, however, saying it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

Rosenzweig added Broadcom could fire Qualcomm management, cut research spending on 5G or stop Qualcomm from participating in the 5G standards-setting process. "Although Broadcom is based in Singapore, Chinese companies such as Huawei and ZTE have emerged as strong competitors in the race towards 5G".

Broadcom had repeatedly tried to persuade USA officials that it didn't pose a threat.

One factor that may have pushed CFIUS to move quickly was a unusual maneuver by Broadcom to relocate to the United States.

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