"What is unusual is blocking the sale on national security grounds for a non-defense-related company". The Ministry said that the takeover would weaken Qualcomm's position in the negotiations on the standardization of 5G solutions, and help Chinese manufacturers (such as Huawei) to dictate terms.
Broadcom is in the process of moving its legal headquarters from Singapore to the USA, with the company planning on finishing the move by April 3, 2018.
President Donald Trump blocked Singapore chipmaker Broadcom from pursuing a hostile takeover of US rival Qualcomm, ruling the proposed combination would imperil national security.
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". For instance, Qualcomm is viewed as being ahead of the curve in the development of next-generation 5G wireless technology, and the US government likely thinks that ceding control to Broadcom could allow Chinese companies such as Huawei to become leaders in this crucial space going forward.
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This decision ends Broadcom's four month, $117 billion bid to buy Qualcomm which would have been the largest technology industry deal in history. That was the opening salvo in a battle that saw Broadcom attempt to appoint 11 nominees to QCOM's board, an FTC investigation and multiple bids.
The order also directed Broadcom to provide a certification of termination of the proposed takeover to CFIUS and certify on a weekly basis that they are in compliance to fully and permanently abandon the takeover.
Since the drama began on November 6, Broadcom shares had lost over 5% of their value.
Absorbing Qualcomm, Broadcom would have significantly expanded the range of solutions that today are largely limited to chips for Wi-Fi and Bluetooth equipment, and also intended for industrial applications. CFIUS tends to step in only after a deal is struck and has to go through regulatory review.
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Hence, U.S. regulators decided this week that a U.S. -based wireless capability was a strategic economic and military asset that should not be acquired by a foreign investor. By allowing Qualcomm to slip into the hands of a foreign country, the US would be left behind.
Officially, Broadcom's pursuit of Qualcomm is over, seemingly entirely to do with concerns of national security. "Having a well-known and trusted company hold the dominant role that Qualcomm does in the US telecommunications infrastructure provides significant confidence in the integrity of such infrastructure as it relates to national security". At that point, Broadcom could contest the authority of CFIUS since its jurisdiction covers foreign companies.
Broadcom meanwhile is working to address the concerns that its acquisition will pose a security risk.
It seems that Broadcom may not be acquiring Qualcomm after all. The move would have been a defensive one against the combined companies, but with the status quo, Intel won't be feeling the pressure to take action. According to Bloomberg, the company is now working to shift its headquarters from Singapore to the U.S. The transition is expected to be completed by April 3.
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