Broadcom Seen Staying on Deal Path Despite Trump's Qualcomm Halt

Broadcom Seen Staying on Deal Path Despite Trump's Qualcomm Halt

Most analysts assume Broadcom will now walk away from Qualcomm, with some flagging San Jose-based Xilinx Inc and Israel's Mellanox Technologies Ltd, both diversified makers of communications chips, as likely next targets.

Only five takeovers of American firms have been blocked by USA presidents on national security grounds since 1990.

Broadcom sought to grow its wireless and broadband portfolio with its $117 billion bid for Qualcomm.

With this in mind, analysts have said a deal between Qualcomm and Broadcom could have given Huawei the chance to take over the top spot in years to come - a situation United States politicians wanted to prevent given their ongoing security concerns around Chinese telecom firms doing business with U.S. carriers.

San Diego-based Qualcomm evolved from a USA military aerospace contractor to become the dominant player in wireless radio technology over the past two decades, with its chips used in half of all smartphones.

Broadcom could not be immediately reached for comment.

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"In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the US, and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance", the company said in a statement.

It all happened over national security issues, and it all has to do with Huawei, a giant Chinese corporation whose ties to Beijing are a cause of concern among intelligence agencies. CFIUS had told lawyers for the companies in a letter dated Sunday that Broadcom had repeatedly violated its order to provide the panel with five days' notice before taking any action on its redomiciliation plan.

Mr Trump signed an order late on Monday to halt what would have been the biggest-ever technology deal on concerns that a takeover of Qualcomm by the Singapore-based company would erode the United States' lead in mobile technology and give China the upper hand. 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.

Now, Mr. Trump's order leaves Broadcom little choice but to move on.

But with Broadcom playing countless takeover-related tricks to move closer and closer to being able to buy Qualcomm, the White House and Trump administration has stepped in to block it all. 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.

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