Trump's move to stall Broadcom bid for Qualcomm questioned

Trump blocks Broadcom's $117 billion bid for Qualcomm out of national security concerns, a highly unusual move

"If Broadcom completes its redomiciling in the a way that extinguishes any non-U.S. ownership or control, then I think they can open the door to many, if not all, acquisitions. they would effectively no longer be subject to a CFIUS-initiated review or investigation", said Guillermo Christensen, a lawyer who works on CFIUS issues at Brown Rudnick in Washington. Lawmakers accused the company of having close links to Beijing, and said it posed a threat to United States national security. Thus it appears that the concern stems mainly from the fear that Qualcomm's status as a world leader in the emerging 5G standard may be threatened.

Supporting his decision to block the deal, Donald Trump said there is "credible evidence" that Broadcom and its affiliates "might take action that threatens to impair the national security of the United States".

The CFIUS had concluded that Broadcom's proposed takeover of Qualcomm could pose a risk to the national security of the US, the Treasury Department said in a letter last week. However, Qualcomm has not said anything about this order of Trump. "Even before that, we believe deal size (Intel $244 billion market cap and Broadcom $104 billion), global regulatory approval, and customer supplier concentration fears and thus pushback are sufficient to keep us skeptical". While the United States remains dominant in the standard setting space now, China would likely compete robustly to fill any void left by Qualcomm as a result of this [Broadcom] hostile takeover.

Sources familiar with the matter previously said that Qualcomm does sensitive work for the USA government, which concerns lawyers and officials saying that Broadcom could sell parts of Qualcomm to weaken the U.S.'s race to 5G technology.

Last week, the CFIUS started analyzing the proposed merger, and found serious issues that may hamper the development of next generation wireless technology - 5G - and make the U.S. information grid subject to Chinese spying and sabotage.

Broadcom was working to move its headquarters to the USA, making itself an American company for legal purposes.

For the last few months, the Singapore-based company has been pushing hard to acquire Qualcomm, which on its end is making efforts to reject the bid. The smartphone SoC and cellular modem company has already been through the ringer with regulators of late, it's trying to get approval for its own purchase of NXP finalized (China still has to sign off), and it felt Broadcom's own offer wasn't a good one. (NASDAQ:QCOM), which has been under government scrutiny due to national security concerns. Broadcom is now in the process of moving its headquarters from Singapore to the US, a move expected to be complete by April 3. For one thing, it is only going to become harder for foreign tech companies - not just Chinese - to acquire USA technology businesses as the White House appears receptive to any argument around the diminution of American corporate might.

Today's order was not the first time that the Trump administration has impeded a major takeover deal.

And the US government has already been actively blocking Huawei's USA ambitions, including pressuring AT&T (NYSE:T) from carrying Huawei smartphones just prior to the planned CES 2018 announcement of that deal. The U.S. authorities also recently blocked a proposal by Alibaba's Ant Financial to acquire the money transfer firm Moneygram.

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