Why the U.S. killed Broadcom's giant bid for Qualcomm

US President Donald Trump

Broadcom said Wednesday it has withdrawn its offer to acquire Qualcomm in the wake of President Trump's order blocking the sale on national security grounds.

Recall, 6 November 2017, the year Broadcom announced that Qualcomm offers over 105 billion dollars or $70 per share - at that time it was 28% above the current market price.

Trump's decision in this regard comes after Broadcom said last Friday that it will ask its shareholders to approve its plan to redomicile to the US.

The chipmaking sector is in a race to develop chips for the latest 5G wireless technology and Qualcomm is considered to be a leader in this field, followed by Broadcom and China's telecoms giant Huawei.

However, a recent US presidential order blocked the acquisition of Qualcomm by Broadcom, setting up the biggest possible road block in Broadcom's plans. Patrick Moorhead, an analyst with Moor Insights & Strategy, says Qualcomm is one of the few wireless chip companies that invests for the long term.

London addressed the Trump administration's blocking of Singapore-based semiconductor manufacturer Broadcom's hostile takeover attempt of US -based competitor Qualcomm.

Trump issued on Monday an order barring the proposed mega-acquisition, saying there is credible evidence such a deal "threatens to impair the national security of the US", according to a White House statement.

Though Qualcomm escaped a hostile bid by Broadcom, it still faces serious issues with its licensing practices and the European Commission.

"Were Broadcom to purchase Qualcomm and apply the same principles it has to other acquisitions, the likely effect would be to dramatically slow those advances down, both through the company's tactics as well as the likely departures of key employees who would be averse to working for Broadcom". The Singapore-based company is stopping any attempt to acquire Qualcomm so you know it' really not happening.

It now could possibly make one more offer for Qualcomm once it completes its relocation to the US, said Zino.

It would appear that Broadcom's ambitions of buying Qualcomm are well and truly dead.

He added that the government is not trying to "make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled U.S. employees".

Absorbing Qualcomm, Broadcom would have significantly expanded the range of solutions that today are largely limited to chips for Wi-Fi and Bluetooth equipment, and also intended for industrial applications.

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