Broadcom Ltd Chief Executive Hock Tan is unlikely to slow his acquisition spree after US President Donald Trump blocked the microchip maker's US$117 billion (RM456.7 billion) bid for Qualcomm Inc on national security grounds, analysts said yesterday.
Broadcom said it was reviewing the presidential order. Although Broadcom is based in Singapore, China loomed large over the US government's fears about a foreign takeover of chipmaker Qualcomm.
Qualcomm shares had fallen 5.2 percent to $59.55 at 0930 EDT on March 13, while Broadcom shares rose 1.5 percent to $266.93.
The earlier redomiciliation also appears aimed at blunting concerns raised by the U.S. Treasury Department's Committee on Foreign Investment in the U.S. (CFIUS). "Underpinning that is concern about China's growing competitiveness in areas such as 5G and artificial intelligence, which are set to become increasingly important in the next few years", the publication reported.
That panel, the Committee on Foreign Investment in the US, known as CFIUS, said it was anxious that Broadcom would stymie research and development at Qualcomm given its reputation as a cost-cutting behemoth. But unlike with its steel tariffs, the Administration's national-security concerns in this case are legitimate. He described the CFIUS communication to Broadcom as "unprecedented".
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This is the fifth time a United States president has blocked a deal based on CFIUS objections and the second deal Mr Trump has stopped since assuming office. The company will also drop its challenge to Qualcomm's board, the people added.
The order issued by the White House cited "credible evidence" that Broadcom taking control of Qualcomm potentially threatened to "impair the national security of the United States".
The move by Mr Trump to kill the deal comes only months after the United States president himself stood next to Broadcom chief executive Tan Hock Eng at the White House, announcing the company's decision to move its headquarters to the U.S. and calling it "one of the really great, great companies". While Intel is "eager for Broadcom to fail", it could make a play for the company if the merger gained momentum, the Journal said in another report on Friday. Broadcom's options are "not many, and not good", said Michael Gershberg, an attorney with Fried, Frank, Harris, Shriver & Jacobson LLP, who has experience with CFIUS cases.
Others have said Trump's decision was more about competitiveness than security concerns.
This item was corrected at 12:32 p.m. ET on Tues., March 13, 2018 to show that A bipartisan group of 22 House members wrote to the Committee on Foreign Investment in the U.S.in December 2016, not December of previous year.