Broadcom Could Fight Block Against Qualcomm Merger Bid

Peter Castro
March 15, 2018

Senator Chuck Schumer, the top Democrat in the U.S. Senate, on Tuesday praised President Donald's Trump's decision to block chipmaker Broadcom Ltd's proposed takeover of Qualcomm Inc, calling China's trade practices "rapacious".

"The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether affected directly or indirectly, is also prohibited".

While Huawei wasn't a part of the deal and didn't try to make a run at Qualcomm or Broadcom, there's growing concern in the us that China is gaining too much control over the mobile Internet infrastructure and other components that the increasingly relying upon.

In such a scenario, Broadcom - which now works under the laws of Singapore - would have been considered as an American company and thus its proposed Dollars 117 billion would have been considered outside the preview of a federal agency - the Committee on Foreign Investment in the United States (CFIUS)? that reviews foreign deal. In recent weeks, the president has turned to an arsenal of tools - including tariffs and an obscure government review panel - to ward off foreign control in American industries and, in particular, thwart the rise of China.

His order cited "credible evidence" that the proposed $140bn (£100bn) deal "threatens to impair the national security of the US", reports the BBC.

Trump Says Broadcom Limited is Moving its Headquarters From Singapore to the U.S.

Let's see what the company will do now.

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Trump said his decision was informed by a recommendation from the Committee on Foreign Investment in the United States, an interagency panel that - in its own words - investigates "transactions that could result in control of a USA business by a foreign person".

This weekend, before Trump's order, Mir wrote the same lawyers again, this time to note that the CFIUS investigation "has so far confirmed the national security concerns" identified in his earlier letter. Last week, the CFIUS issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days. Below we take a look at why the deal fell through and what it could mean for Qualcomm going forward.

Broadcom may be Singapore-domiciled, but it was originally an American company, still has the majority of its staff and office space in the USA, and had announced plans to re-domicile there.

Broadcom, which had pledged to move all its headquarter functions to the United States if it won the day, said it "strongly disagreed" with the reasoning behind the decision.

"This should concern us as a nation". 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. "These ties were most recently reflected in the agreements Broadcom signed with HBC, Inspur and StarTimes.�China has a finely honed capability to access the technology of companies such as Broadcom, along with that of their subsidiaries and acquisitions", he said. "There is certainly an argument that wireless IP/semiconductors are essential to national security".

This is unedited, unformatted feed from the Press Trust of India wire.

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