Donald Trump has blocked Broadcom’s $142bn (£102m) takeover of US rival Qualcomm, killing the biggest technology deal ever under the assertion that it would be a threat to U.S. national security.
In an order issued on Monday evening, the US president said there was “credible evidence” that led him to believe that, in buying Qualcomm, Singapore-based Broadcom “might take action that that threatens to impair the national security of the United States”.
He said the proposed takeover of Qualcomm was “prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited”.
Upon review of a recommendation from the Committee on Foreign Investment in the United States and consideration, as appropriate, of the factors set forth in the Defense Production Act of 1950, as amended, the President has made relevant findings and issued the following Order:
Last week, the US government had delayed a shareholder meeting at Qualcomm, which would have paved the way for the deal to progress, to allow for a review by the Committee on Foreign Investment in the United States (Cfius).
REGARDING THE PROPOSED TAKEOVER OF QUALCOMM INCORPORATEDBYBROADCOM LIMITED
By the authority vested in me as President by the Constitution and the laws of the United States of America, including section 721 of the Defense Production Act of 1950, asamended (section 721), 50 U.S.C. 4565, it is hereby ordered as follows:
_Section_ _1_. _Findings_. (a) 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; and
(b) Provisions of law, other than section 721 and theInternational Emergency Economic Powers Act (50 U.S.C. 1701″etseq”.), do not, in my judgment, provide adequate and appropriate authority for me to protect the national security inthis matter.
_Sec_. _2_. _Actions Ordered and Authorized_. On the basis of the findings set forth in section 1 of this order, considering the factors described in subsection 721(f) of the Defense Production Act of 1950, as appropriate, and pursuant to my authority under applicable law, including section 721, I hereby order that:
(a) The proposed takeover of Qualcomm by the Purchaser isprohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.
(b) 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.
(c) The Purchaser shall uphold its proxy commitments tothose Qualcomm stockholders who have returned their final proxies to the Purchaser, to the extent consistent with thisorder.
(d) Qualcomm shall hold its annual stockholder meeting no later than 10 days following the written notice of the meeting provided to stockholders under Delaware General Corporation Law, Title 8, Chapter 1, Subchapter VII, section 222(b), and that notice shall be provided as soon as possible.
(e) The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover. Immediately upon completion of all steps necessary to terminate the proposed takeover of Qualcomm, the Purchaser and Qualcomm shall certify in writing to the Committee on Foreign Investment in the UnitedStates (CFIUS) that such termination has been effected inaccordance with this order and that all steps necessary to fully and permanently abandon the proposed takeover of Qualcomm have been completed.
(f) From the date of this order until the Purchaser and Qualcomm provide a certification of termination of the proposed takeover to CFIUS pursuant to subsection (e) of this section, the Purchaser and Qualcomm shall certify to CFIUS on a weekly basis that they are in compliance with this order and include adescription of efforts to fully and permanently abandon the proposed takeover of Qualcomm and a timeline for projected completion of remaining actions.
(g) Any transaction or other device entered into or employed for the purpose of, or with the effect of, avoiding orcircumventing this order is prohibited.
(h) If any provision of this order, or the application of any provision to any person or circumstances, is held to be invalid, the remainder of this order and the application of its other provisions to any other persons or circumstances shall not be affected thereby. If any provision of this order, or the application of any provision to any person or circumstances, is held to be invalid because of the lack of certain procedural requirements, the relevant executive branch officials shall implement those procedural requirements.
(i) This order supersedes the Interim Order issued byCFIUS on March 4, 2018.
(j) The Attorney General is authorized to take any steps necessary to enforce this order.
_Sec_. _3_. _Reservation_. I hereby reserve my authority to issue further orders with respect to the Purchaser and Qualcomm as shall in my judgment be necessary to protect the national security of the United States.
_Sec_. _4_. _Publication and Transmittal_. (a) This order shall be published in the “Federal Register”.
(b) I hereby direct the Secretary of the Treasury to transmit a copy of this order to Qualcomm and Broadcom.
DONALD J. TRUMP
THE WHITE HOUSE,
March 12, 2018.
The government panel had warned on Sunday, in a letter to both Broadcom and Qualcomm, that the proposed merger had “so far” confirmed national security concerns, pointing specifically to the fact it may allow Chinese companies to become dominant in the wireless technology sector.
The panel added that it had had to speed up its investigation “in light of the action Broadcom has taken in violation of the interim order”, as the chipmaker was attempting to accelerate moving its headquarters to the US, after which the deal may have no longer been under Cfius’s jurisdiction.
Mr Trump had in November said he was “thrilled” at Broadcom’s relocation. The move of its legal and operational base had been announced by the president in the Oval Office.
Broadcom’s attempts to buy Qualcomm had been repeatedly rebuffed by the US group, which had said it was holding out for a higher offer of around $160bn.
However, even at $142bn the deal would have still ranked as the largest technology takeover ever.