Broadcom has formally admitted defeat after US President Trump stepped in and forbade a merger between the firm and Qualcomm.
On Wednesday, the Singapore-based company said in a statement that it has “withdrawn and terminated its offer to acquire Qualcomm,” as well as withdrawn the list of six independent director nominees for Qualcomm’s 2018 Annual Meeting of Stockholders.
“Although we are disappointed with this outcome, Broadcom will comply with the Order. Broadcom will continue to move forward with its redomiciliation process and will hold its Special Meeting of Stockholders as planned on 23 March 2018.”
Despite the fierce resistance of Qualcomm to such a merger — including the price point, Broadcom’s aggressive plans to replace the board, and regulatory concerns — Broadcom said it “sincerely appreciate[s] the significant support we received from the Qualcomm and Broadcom stockholders throughout this process.”
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The company has also highlighted a statement issued by US Treasury Secretary and CFIUS chair Steven Mnuchin on 12 March, which said, “This decision is based on the facts and national security sensitivities related to this particular transaction only and is not intended to make any other statement about Broadcom or its employees, including its thousands of hard-working and highly skilled US employees.”
The US Committee on Foreign Investment in the US (CFIUS) does not usually get involved in transactions involving foreign and US companies until a deal is formally signed and announced.
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However, after Qualcomm issued a voluntary request to the US agency, CFIUS determined — and very quickly — that a potential deal between the two semiconductor giants could become a national security risk.
Broadcom is co-based in Singapore and California, and Qualcomm does have business dealings and partnerships in China.
CFIUS, however, determined that a buyout would reduce Qualcomm’s competitive edge and potentially give China an unacceptable level of influence in next-generation technologies, such as 5G networking.
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CFIUS said this issue warranted a “full investigation,” but the matter was, instead, sent to the White House. President Trump then blocked the deal, citing “credible evidence” that a merger was not in the best interest of the United States.