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Trump blocks $117bn telecomm deal

By Michael Hernandez, Washington on 13/03/2018

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•U.S. President Donald Trump
•U.S. President Donald Trump

U.S. President Donald Trump blocked the $117 billion hostile takeover of chip maker Qualcomm by Singapore-based Broadcom Monday.

Qualcomm had rejected Broadcom’s bid, and in announcing his decision, Trump said “there is credible evidence” to believe Broadcom and its partners “might take action that threatens to impair the national security of the United States” if the takeover goes through.

The computer chip makers must “immediately and permanently abandon the proposed takeover”, Trump said in a presidential order.

“The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” he said.

Broadcom said in a statement it is reviewing the order but emphasised it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns”.

While initially founded in the U.S., Broadcom reincorporated in Singapore in 2016 after it was sold to Avago. It maintains its administrative headquarters in California.

Qualcomm makes key components found in many cell phones and mobile devices, and the chip company has faced successive legal challenges alleging it has engaged in unfair business practices.

Trump’s decision was widely foreshadowed by a March 5 letter from Treasury Department regulators to the companies that raised what it called “national security risks” of the takeover, particularly the looming transition to 5G cellular networks.

“Qualcomm has become well-known to, and trusted by, the U.S. government,” said Deputy Assistant Secretary for Investment Security Aimen Mir. “Limitation or cessation of supply of Qualcomm goods or services to the U.S. government could have a detrimental impact on U.S. national security.”

In an ultimately futile attempt to assuage concerns, Broadcom said last week it was committed to making the U.S. “the global leader in 5G”. The company further pledged to create a $1.5 billion fund to bolster training and education for U.S. engineers. (Anadolu Agency)

Source News Express

Posted 13/03/2018 11:37:09 AM

 

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