US President Donald Trump has weighed in on the back-and-forth will-they-won't-they between Broadcom and its larger rival Qualcomm, issuing a presidential order blocking any acquisition or merger between the two companies.
Broadcom has been trying to pick up rival Qualcomm since making an unsolicited near-£100 billion acquisition offer in November last year, not allowing the fact that Qualcomm is roughly twice its size in both headcount and revenue get in the way. Having quickly rejected the first offer, Qualcomm has since been playing poker with Broadcom: Fighting off a hostile takeover attempt led by Broadcom's Hock Tan, the company has continued rejecting its rival's advances but confessed it was willing to talk if the price was right.
The chance of the acquisition going ahead - whether by agreement or by Tan's hostile takeover attempt succeeding - went down late last night, however, when US President Donald Trump issued a presidential order blocking any such deal. 'There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom), along with its partners, subsidiaries, or affiliates, including Broadcom Corporation, a California corporation, and Broadcom Cayman L.P., a Cayman Islands limited partnership, and their partners, subsidiaries, or affiliates (together, the Purchaser), through exercising control of Qualcomm Incorporated (Qualcomm), a Delaware corporation, might take action that threatens to impair the national security of the United States,' the order reads, 'and provisions of law, other than section 721 and the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), do not, in my judgement, provide adequate and appropriate authority for me to protect the national security in this matter.
'I hereby order that: The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited. All 15 individuals listed as potential candidates on the Form of Blue Proxy Card filed by Broadcom and Broadcom Corporation with the Securities and Exchange Commission on February 20, 2018 (together, the Candidates), are hereby disqualified from standing for election as directors of Qualcomm. Qualcomm is prohibited from accepting the nomination of or votes for any of the Candidates. The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover.'
The wording of the order leaves little wriggle room for either company, and likely also torpedoes a rumoured deal that would see Intel acquire Broadcom as a means of reducing the threat of a Broadcom-Qualcomm merger on Intel's ailing mobile business division.
Neither Broadcom nor Qualcomm have issued a statement on the matter, bar to confirm their receipt of the order.
June 5 2020 | 17:45