Trump bars Singapore's Broadcom from hostile Qualcomm bid

Business | 13 Mar 2018 8:57 pm

President Donald Trump blocked Singapore chipmaker Broadcom from pursuing a hostile takeover of U.S. rival Qualcomm, ruling the proposed combination would imperil national security.

The decision, announced late Monday, abruptly ends Broadcom’s four-month, US$117 billion bid to buy Qualcomm — a deal that would have been the largest ever completed in the technology industry.

In a statement, Broadcom said it "strongly disagrees” that the acquisition raises any national-security concerns. Qualcomm did not immediately respond to a request for comment.

Trump’s order gives Broadcom few options other than to drop its bid, said Macquarie Securities analyst Srinivas Pajjuri.

Broadcom faced challenges almost from the start of its quest. Qualcomm quickly spurned its unsolicited suitor and continued to resist even after Broadcom raised its original offer from US$103 billion.

Broadcom’s Singapore connections complicated matters, even though the company maintained its physical headquarters in Silicon Valley and virtually all of its shareholders are in the U.S.

The Trump administration nevertheless balked at the prospect of a prominent U.S. 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.

Although its name is not widely known outside the technology industry, Qualcomm is one of the world’s leading makers of the processors that power many smartphones and other mobile devices. Qualcomm also owns patents on key pieces of mobile technology that Apple and other manufacturers rely upon in their products.

Qualcomm is fending off allegations in complaints filed by Apple and government regulators around the world that it has abused the power of its mobile patents to throttle competition and charge excessive royalties for its technology.

Broadcom chief executive Hock Tan had seized on Qualcomm’s legal headaches in his attempt to persuade the U.S. government to keep the deal alive. "Qualcomm faces a number of challenges that hamper its role in developing 5G,” Tan wrote in a letter sent to U.S. Congress last week. Unlike Qualcomm, Tan said, Broadcom financed its innovation through "lawful practices.”-AP

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