Broadcom has confirmed that it will withdraw its offer to acquire rival chip company Qualcomm.
The news comes as little surprise after President Trump announced earlier this week that he was blocking Broadcom’s proposed Qualcomm acquisition on national security grounds. Though Broadcom operates broadly a U.S. firm, it is headquartered in Singapore. However, Broadcom had already committed to redomiciling its business to the U.S., and confirmed this week that it would do so by April 3.
By way of a quick recap, the months-long saga began in November when Qualcomm rejected a takeover offer from Broadcom. Things went hostile a month later when Broadcom revealed it would target Qualcomm’s shareholders directly and ask them to elect a new slate of directors chosen by Broadcom, and Broadcom later went on to submit a revised $121 billion bid last month. However, Qualcomm once again rejected the deal.
A shareholder meeting was scheduled to be held earlier this month to vote on the new board, however this was delayed until next month at the request of the Committee on Foreign Investment in the United States (CFIUS), which can prevent business deals where it’s deemed could harm national security.
The crux of the problem according to U.S. officials is that Qualcomm represents the country’s biggest hope in leading the 5G mobile technology race, and is among the biggest competitors to China’s Huawei. The theory put forward by CFIUS was that being bought out by Broadcom would stymie Qualcomm’s research and development, while Broadcom’s relationships with “third party foreign entities” was also a risk.
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