Broadcom Ltd. formally abandoned its attempt to acquire rival chipmaker Qualcomm Inc. after U.S. President Donald Trump blocked the deal citing national security risks. The company has also withdrawn its slate of independent director nominees for Qualcomm's board.
Although Broadcom is incorporated and based in Singapore, CEO Hock Tan announced late previous year while visiting Trump at the White House that the company would return its corporate headquarters to the United States, likely using San Jose as a base.
US Treasury Secretary Steven Mnuchin was quick to clarify the decision, stating Trump's order was strictly "based on the facts and national security sensitivities" related to the transaction and not meant to "make any other statement about Broadcom or its employees". Broadcom aimed to win control of the board so it could advance with its hostile takeover.
While this sure feels like a major setback for Broadcom's future plans, the company is still moving forward with another big change, as it reaffirms its intent to continue with redomiciliation plans, moving its headquarters back to the States. "Although we are disappointed with this outcome, Broadcom will comply with the Order", The company said in a statement.
Trump's order came after a government panel tasked with reviewing the national security implications for business deals disclosed serious concerns about the bid. At one point, the company also offered to raise its offer for Qualcomm, and when CFIUS first raised concerns about the deal, Broadcom sent a letter to lawmakers promising it would not slow research and development in 5G networking technology if the merger were approved. Qualcomm said that Broadcom was fundamentally underestimating the company's value.
Buying Qualcomm would have make Broadcom the third-largest chip maker, behind Intel Corp. and Samsung Electronics Co.