Broadcom Will Still Redomicile to US After Ending Qualcomm Bid

Broadcom Will Still Redomicile to US After Ending Qualcomm Bid

Broadcom Will Still Redomicile to US After Ending Qualcomm Bid

Yet the Committee on Foreign Investment in the United States, or CFIUS, tasked with evaluating foreign investments in the U.S., advised Trump to block the acquisition.

"Although we are disappointed with this outcome, Broadcom will comply with the Order", the company said in a statement issued this morning. It maintains its administrative headquarters in California.

CFIUS investigated whether "the likelihood that acquisition of Qualcomm by Broadcom could result in changes that affect the security and integrity of supply of goods and services to the USA government in a manner that is detrimental to United States national security". Companies, including Qualcomm and China's Huawei, have been investing heavily to stake their claim in the underlying technology.

Such beachheads can be enormously valuable; control over basic technologies and their patents can yield huge fortunes in computer chips, software and related equipment.

So it's back to "business as usual" for Qualcomm.

Trump's order is in line with the administration's protectionist instincts.

Trump's decision was foreshadowed by a March 5 letter from Treasury Department regulators to the companies that raised what it called "national security risks" of the takeover, particularly the looming transition to 5G cellular networks. The S&P 500 technology sector shed more than 1%, the biggest drop for the sector since March 1.

What's to stop Trump or the CFIUS from barring other companies from considering acquisitions from non-U.S. -based companies?

Broadcom had vowed earlier this month that it would make the United States "the global leader in 5G". The company had said in a recent corporate filing that it was finalizing its plans to become an American entity in early April. A small price to pay to scoop up American companies beyond CFIUS's reach.

A person familiar with CFIUS's investigation, who requested anonymity to speak freely about the matter, said this strategy may have doomed the transaction.

You can read the full executive order right here. "This feels a little more personal to me". Its first offer was rejected by Qualcomm's board, as the $70 per share Broadcom was offering wasn't enough to tempt a sale. Qualcomm shares fell 4.3 percent.

In the Broadcom-Qualcomm deal, the focus is on so-called "5G" wireless technology, which promises data speeds that rival those of landline broadband now. The capabilities of connected devices at work and home would vastly expand.

"The case against the acquisition is inherently tied to the argument that the transaction could adversely impact USA control of the pace and progress of the development of 5G technologies", he said.

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