No Deal

Trump blocks Broadcom’s bid to take over Qualcomm, sending a warning to foreign companies with eyes on the U.S.

Broadcom Ltd. is “doing something great. I appreciate it,” said President Donald Trump in November when he announced the Singapore-based chipmaker’s planned relocation to the U.S. It was certainly great for Trump, bolstering the argument that his policies were making America more hospitable to business. Broadcom’s chief executive officer, Hock Tan, on the other hand, doesn’t seem to have gotten as much out of that White House photo op.

Trump on March 12 took the unprecedented step of swatting down a potential Broadcom takeover of U.S. chipmaker Qualcomm Inc. before the companies even agreed on a deal. He followed the recommendation of the Committee on Foreign Investment in the U.S.—the regulatory body led by the secretary of the Treasury charged with reviewing foreign takeovers—and cited “credible evidence” that Broadcom may take actions that could impair national security should it acquire Qualcomm. Broadcom disputed that finding but is complying with the order and withdrawing its offer for Qualcomm.

The odds of a merger happening were already low. CFIUS earlier this month ordered a 30-day stay of Broadcom’s attempt to unseat a majority of Qualcomm’s board and force the company into negotiations over its $100 billion offer. What’s jarring is the swiftness and the scope of the U.S. government’s rejection. CFIUS often takes months to review a transaction, and usually there’s back-and-forth behind the scenes as regulators give acquirers the option of agreeing to concessions to win approval of their transaction. This investigation wrapped up mere hours after CFIUS officials met with Broadcom executives on March 12 to hear the company’s side.