Broadcom isn't buying Qualcomm. Now what?

Broadcom isn't buying Qualcomm. Now what?

Broadcom isn't buying Qualcomm. Now what?

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.

Several analysts said the USA government is growing concerned that Huawei will develop such technologies nearly as fast as their American counterparts, narrowing the gap between Chinese and US companies.

The US Treasury Department warned in a letter made public in early March that since Broadcom was financing the deal with over $100 billion in debt, it would be under pressure to squeeze more profits out of Qualcomm.

Qualcomm had initially rebuffed Broadcom's overtures, initially saying that the offer materially undervalued the company.

Now that Broadcom has withdrawn its offer, and its nominated directors, it remains to be seen what's going to happen next.

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

Despite hitting back at the U.S. gov block, Broadcom had struggled to finalise a deal with Qualcomm anyway, with the latter claiming that Broadcom's bids Broadcom claiming they "undervalued" the company and its "leadership position in mobile technology". In contrast to this, Broadcom has dropped its bid for Qualcomm takeover.

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It is uncertain whether or not this will circumvent the national security concerns and allow Broadcom to move past the executive order, however we know that for now, Qualcomm is free to proceed as normal without worrying of an impending hostile takeover.

Such an agressive action to block an acquisition was unprecedented, as deals are usually reviewed later in the process if national security concerns arise.

Broadcom has been pursuing Qualcomm for quite some time now.

"Although we are disappointed with this outcome, Broadcom will comply with the [order]", the company said in a statement.

In case you hadn't heard, Broadcom has been trying to purchase Qualcomm since late past year, with Qualcomm resisting at every corner.

As part of its attempts to persuade Qualcomm stockholders, and U.S. government and regulators Broadcom promised to shift its headquarters to the US. Broadcom had its headquarters in Irvine, Calif., until a Singapore-based company bought it in 2015.

Plus, Broadcom's move to redomicile to the U.S.

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