President Donald Trump will not let Broadcom proceed with a blockbuster hostile takeover of Qualcomm.

Trump issued an executive order on Monday that prohibits Broadcom from acquiring Qualcomm for roughly $117 billion, citing national security concerns.

“The proposed takeover of Qualcomm (qcom)by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” the executive order, signed by Trump, said.

The order also said that Broadcom’s (avgo) 15 proposed candidates to Qualcomm’s board of directors have been “disqualified,” Qualcomm has previously rejected Broadcom’s proposed director nominees to its board.

Trump cited in the order that there is “credible evidence” that causes him to believe that Broadcom—if able to purchase Qualcomm—“might take action that threatens to impair the national security of the United States,” although he didn’t elaborate on the evidence. Broadcom is in the process of reincorporating in San Jose, Calif. It is currently based in Singapore.

Last week, the U.S. Committee on Foreign Investment said it was considering investigating the proposed Broadcom deal citing national security concerns, which ended up delaying a March Qualcomm shareholder meeting. As a response, Broadcom publicly accused Qualcomm of “secretly” asking the committee to investigate the deal, which Qualcomm then denied.

The White House statement directs Broadcom and Qualcomm to “immediately and permanently abandon the proposed takeover,” and verify in writing to the foreign investment committee that they have indeed terminated the deal and any such variation.

A possible combination of Broadcom and Qualcomm would have created a massive wireless and mobile semiconductor giant with a market cap of over $200 billion. Such a huge semiconductor company was enough to worry Intel (intc), which the reported last week was considering buying Broadcom if the deal actually went through.

President Trump’s executive order puts an end to Broadcom’s unsolicited pursuit of Qualcomm. Qualcomm had repeatedly rejected Broadcom’s bids, citing national security concerns and a belief that the deal undervalues the company.

Daniel Ives of GBH Insights said in a research note that while Broadcom could potentially challenge the order, it’s not likely to make a difference. He wrote that “the Trump edict essentially kills any chances of this deal happening and is a major gut punch to those Qualcomm bulls hoping this soap opera could end with a bid following pressure from the shareholder meeting, which is poised to happen next month after getting delayed.”

“While Qualcomm still remains an M&A candidate for another chip player, this deal dissolving is a clear positive for Intel which is in a further position of strength with the potential marriage of Broadcom and Qualcomm now broken up by the Beltway before it even got to the altar,” Ives wrote.

contacted Broadcom and Qualcomm for comment and will update this story if they respond.

Qualcomm shares were down 4.5% in after-hours trading to $59.98, while Broadcom shares were relatively flat at $265. </s> President Donald Trump killed Broadcom's proposed buyout of Qualcomm, citing national security concerns, according to a statement issued by the White House on Monday.

"There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom)...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 statement said.

Both companies were ordered to immediately abandon the proposed deal. The order, an unusual move by any sitting U.S. president, also prohibits all 15 of Broadcom's proposed candidates for Qualcomm's board from standing for election.

The U.S. Treasury's Committee on Foreign Investment in the United States had already expressed concerns about the transaction in a March 5 letter addressed to Broadcom and Qualcomm lawyers. CFIUS listed several issues, including Broadcom's reputation for cutting research spending and potential national security risks.

Despite CFIUS's concerns, Broadcom had been optimistic that a plan to move its headquarters from Singapore to the U.S. could save the deal.

Shares of Qualcomm fell close to 5 percent after the announcement. Broadcom stock gained about 1 percent in extended trading, after briefly falling.



Qualcomm did not immediately respond to CNBC's request for comment. In a statement that it issued late Monday, Broadcom said it is reviewing the order.

"Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns," the statement said.

Here's the full statement from the White House: </s> President Donald Trump on Monday blocked Broadcom Ltd.’s $117 billion hostile bid for Qualcomm Inc., capping a remarkable series of moves by the Trump administration reflecting officials’ concerns about an intensifying arms race between the U.S. and China over advanced technologies.

While Broadcom AVGO, +3.57% is a Singapore-based company, the U.S. panel that vets foreign deals said that the bid could have had implications for the U.S.’s broader technological competition with China. That panel, the Committee on Foreign Investment in the U.S., known as CFIUS, said it was worried that Broadcom would stymie research and development at Qualcomm QCOM, -0.35% given its reputation as a cost-cutting behemoth. CFIUS said such a move could weaken Qualcomm — and thereby the U.S. — against foreign rivals racing to develop next-generation wireless technology known as 5G, such as China’s Huawei Technologies Co.

Read: How Broadcom vs. Qualcomm went from hostile takeover bid to a Trump blockade

Broadcom, which launched its hostile bid for Qualcomm in November in what could have become the technology industry’s biggest-ever deal, was working to redomicile in the U.S. to evade the panel’s review. but the presidential order effectively ended its acquisition hopes.

Broadcom, which has said it would invest in Qualcomm’s 5G technology if a deal went through, said late Monday it was reviewing the order. “Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns,” it said in a statement.

An expanded version of this report appears on WSJ.com.

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Are you underpaid? In a first, U.S. firms reveal how much they pay workers. </s> (Reuters) — U.S. President Donald Trump on Monday blocked microchip maker Broadcom’s proposed takeover of Qualcomm on national security grounds, ending what would have been the technology industry’s biggest deal ever amid concerns that it would give China the upper hand in mobile communications.

The presidential order reflected a calculation that the United States’ lead in creating technology and setting standards for the next generation of mobile cell phone communications would be lost to China if Singapore-based Broadcom took over San Diego-based Qualcomm, according to a White House official.

Qualcomm has emerged as one of the biggest competitors to China’s Huawei Technologies Co [HWT.UL] in the sector, making Qualcomm a prized asset.

Qualcomm had earlier rebuffed Broadcom’s $117 billion bid, which was under investigation by the U.S. Committee on Foreign Investment in the United States (CFIUS), a multi-agency panel led by the Treasury Department that reviews the national security implications of acquisitions of U.S. corporations by foreign companies.

In a letter on March 5, CFIUS said it was investigating whether Broadcom would starve Qualcomm of research dollars that would allow it to compete and also cited the risk of Broadcom’s relationship with“third party foreign entities.”

While it did not identify those entities, the letter repeatedly described Qualcomm as the leading company in so-called 5G technology development and standard setting.

“A shift to Chinese dominance in 5G would have substantial negative national security consequences for the United States,” CFIUS said.“While the United States remains dominant in the standards-setting space currently, China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover.”

A White House official on Monday confirmed that the national security concerns related to the risks of Broadcom’s relationship with third party foreign entities.

A source familiar with CFIUS’ thinking had said that, if the deal was completed, the U.S. military was concerned that within 10 years,“there would essentially be a dominant player in all of these technologies and that’s essentially Huawei, and then the American carriers would have no choice. They would just have to buy Huawei (equipment).”

Huawei has been forging closer commercial ties with big telecom operators across Europe and Asia, putting it in prime position to lead the global race for 5G networks despite U.S. concerns.

Huawei has a dominant position in China, which is set to become the world’s biggest 5G market by far, and has also made inroads in the rest of world to compete with rivals such as Ericsson (ERICb.ST) and Nokia (NOKIA.HE) in several lucrative markets, including countries that are longstanding U.S. allies.

Qualcomm is also a major player in 5G, estimated to have 15 percent of 5G-essential patents in the world, compared with 11 percent for Nokia and 10 percent for all of China, according to a Jefferies report citing LexInnova research. Many smartphone makers are counting on Qualcomm to deliver its 5G chipset on time in late 2018 to roll out their 5G phones in 2019.

Shares of Broadcom rose less than 1.0 percent to $264.10 in after-hours trade while Qualcomm fell 4.3 percent to $60.14.

Broadcom said it was reviewing the presidential order.“Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns,” it said in a statement in response to the decision.

Qualcomm, which had delayed its annual shareholder meeting during the CFIUS review, set the new date for March 23.

The move by Trump to kill the deal comes only months after the U.S. president himself stood next to Broadcom Chief Executive Hock Tan at the White House, announcing the company’s decision to move its headquarters to the United States and calling it“one of the really great, great companies.”

This is the fifth time a U.S. president has blocked a deal based on CFIUS objections and the second deal Trump has stopped since assuming office slightly over a year ago.

“The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” the presidential order released on Monday said.

The order cited“credible evidence” that led Trump to believe that Broadcom’s taking control of Qualcomm“might take action that threatens to impair the national security of the United States.”

Broadcom had struggled to complete its proposed deal to buy Qualcomm, which had cited several concerns including the price offered and potential antitrust hurdles.

The presidential decision to block the deal cannot be appealed. However, it is not clear what rules Broadcom would have to follow if it goes ahead with announced plans to move its headquarters to the United States.

Companies may challenge CFIUS’s jurisdiction in court but may not challenge the inter-agency panel’s national security findings, a CFIUS expert said.

If Broadcom decides to press on with its effort to buy Qualcomm, it would be wise to drop the matter for now while the company quietly wraps up its move to the United States, a second CFIUS expert said. Once the move is done, Broadcom could argue that CFIUS does not have jurisdiction, the second expert said. </s> WASHINGTON (Reuters) - U.S. President Donald Trump, saying there is a national emergency because of tensions with Iran, swept aside objections from Congress and cleared the sale of $8 billion worth of weapons to Saudi Arabia, the United Arab Emirates and Jordan.

The Trump administration informed congressional committees on Friday that it will go ahead with 22 military sales to the Saudis, United Arab Emirates and Jordan, infuriating lawmakers by circumventing a long-standing precedent for congressional review of such sales.

In documents sent to Congress and seen by Reuters, Secretary of State Mike Pompeo listed a wide range of products and services that would be provided to the three countries. They include Raytheon precision-guided munitions (PGMs), support for Boeing Co F-15 aircraft, and Javelin anti-tank missiles, which are made by Raytheon and Lockheed Martin Corp .

Some lawmakers and congressional aides had warned earlier this week that Trump, frustrated with Congress holding up weapons deals like the sale of the Raytheon-made bombs to the Saudis, was considering using a loophole in arms control law to go ahead by declaring a national emergency.

Lawmakers had been blocking sales of offensive military equipment to Saudi Arabia and the United Arab Emirates for months, concerned about the huge civilian toll of the two countries’ air campaign in Yemen and human rights abuses like the murder of Saudi journalist Jamal Khashoggi at a Saudi consulate in Turkey.

Congressional sources said Friday’s order included all the defense equipment that members of Congress had been blocking.

“I am disappointed, but not surprised, that the Trump Administration has failed once again to prioritize our long-term national security interests or stand up for human rights, and instead is granting favors to authoritarian countries like Saudi Arabia,” Senator Bob Menendez said in a statement.

Menendez is one of the members of Congress who reviews such sales because he is the ranking Democrat on the Senate Foreign Relations Committee.

Another, the Republican Foreign Relations Committee chairman, Senator Jim Risch, said he had received formal notification of the administration’s intent to move forward with “a number of arms sales.”

In a statement, Risch said, “I am reviewing and analyzing the legal justification for this action and the associated implications.”

The White House and State Department did not immediately respond to requests for comment.

In his memorandum to Congress justifying the sale, Pompeo listed years of actions by Iran. “Iranian malign activity poses a fundamental threat to the stability of the Middle East and to American security at home and abroad,” he wrote, and cited “a number of troubling and escalatory indications and warnings” from Tehran.

Congressional aides questioned the contention that the weapons had to do with Iran, saying the equipment and services listed by the administration includes large amounts of offensive weapons, like the PGMs and tank ammunition.

They said lawmakers have not been blocking defensive equipment such as Patriot missile defense systems that have been sold to the Saudis.

“This is all materiel that arguably could be used in the Yemen military operation. The defensive stuff we’ve cleared,” one congressional aide said. </s> The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. It is provided to our readers as a service from The Western Journal.

WASHINGTON (AP) — The Latest on the arrest of an executive of Chinese telecoms equipment maker Huawei Technologies (all times local):

A Japanese official has cast doubt over reports that Japan plans to exclude Chinese telecoms equipment makers Huawei Technologies and ZTE Corp. from government purchases due to security concerns.

The Japanese newspaper Yomiuri reported Friday that Tokyo might take the action following the lead of the U.S. and some other countries.

The report, citing unnamed sources, said government officials planned to meet to discuss such a move.

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A senior official at the government office in charge of cybersecurity said Japan has not made such a decision. He said some new policy may be announced next week but it would likely not be what was being reported.

The dramatic arrest of a Chinese telecommunications executive has driven home why it will be so hard for the Trump administration to resolve its deepening conflict with China.

The Huawei Technologies executive, Chief Financial Officer Meng Wanzhou, faces extradition to the United States. A bail hearing was set for Friday.

In the short run, her arrest heightens skepticism about the trade truce that Presidents Donald Trump and Xi Jinping reached last weekend in Buenos Aires, Argentina.

Share markets were rattled by fears that the 90-day cease-fire won’t last.

Huawei has been a subject of U.S. national security concerns that extend well beyond tariffs or market access. Washington and Beijing are locked in a clash between the world’s two largest economies for economic and political dominance for decades to come.

The Associated Press contributed to this report.

We are committed to truth and accuracy in all of our journalism. Read our editorial standards. </s> Trump Says Huawei Could Become Part of Trade Deal With China

(Bloomberg) -- President Donald Trump said Thursday that China’s Huawei Technologies Co., which was put on a U.S. blacklist earlier this month, could be part of a trade pact with the country.

“It’s possible that Huawei even would be included in some kind of a trade deal,” Trump told reporters at the White House, without providing details. “Huawei is something that’s very dangerous. You look at what they’ve done from a security standpoint, from a military standpoint, it’s very dangerous.”

The Trump administration is seeking to choke off Beijing’s access to key technologies by limiting the sale of vital U.S. components to the Chinese telecommunications equipment maker over security concerns.

The U.S. had held off on blacklisting Huawei out of concern the move could disrupt trade negotiations with China and only took action after the last round of trade talks hit an impasse, according to people familiar with the matter. The decision to curtail the Shenzhen-based company’s access to American suppliers unfolded quickly once trade talks broke down, the people said.

The Commerce Department action last week requires American suppliers of Huawei, a crown jewel of Chinese manufacturing, to seek U.S. government permission to do business with the company.

The decision touched off a massive disruption in technology supply chains, hitting some of the biggest component-makers. Intel Corp., Qualcomm Inc. and Broadcom Inc. told their employees they won’t provide products to Huawei until further notice.

Trade talks between Beijing and Washington deadlocked this month as Trump accused China of backing out of a deal that was taking shape with U.S. officials, saying China reneged on an agreement to enshrine a wide range of reforms in law.

Trump increased levies on $200 billion in Chinese imports to 25% from 10%, prompting retaliation from Beijing. The U.S. has said it’s prepared to hit China with new tariffs even as Trump said he’ll meet his Chinese counterpart, Xi Jinping, at next month’s G-20 summit in Japan, an encounter that could prove pivotal.

The Trump administration has offered a reprieve before to a Chinese telecommunications company, ZTE Corp., in a similar situation as Huawei.

The Trump administration last year announced a seven-year ban on U.S. exports to ZTE after it said the company violated sanctions agreements by selling American technology to Iran and North Korea. The ban forced ZTE to announce it was shutting down.

Trump then reversed course, saying he was reconsidering penalties on ZTE as a personal favor to Xi. Shortly after, his administration announced it would allow the company to stay in business after paying a fine, changing its management and providing security guarantees.

To contact the reporter on this story: Alyza Sebenius in Washington at asebenius@bloomberg.net

To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Sarah McGregor, John Harney

For more articles like this, please visit us at bloomberg.com </s> WASHINGTON
• US President Donald Trump has said that China's Huawei Technologies, which was put on a United States blacklist earlier this month, could be part of a trade pact with the country.

"It is possible that Huawei even would be included in some kind of a trade deal," Mr Trump told reporters at the White House on Thursday, without providing details. "Huawei is something that is very dangerous. You look at what they have done from a security standpoint, from a military standpoint, it is very dangerous."

The Trump administration is seeking to choke off Beijing's access to key technologies by limiting the sale of vital US components to the Chinese telecommunications equipment-maker over security concerns.

The US had held off on blacklisting Huawei out of concern the move could disrupt trade negotiations with China and took action only after the last round of trade talks hit an impasse, according to people familiar with the matter.

The decision to curtail the Shenzhen-based company's access to US suppliers unfolded quickly once trade talks broke down.

The US Commerce Department's action last week requires American suppliers of Huawei, a crown jewel of Chinese manufacturing, to seek US government permission to do business with the company.

The decision touched off a massive disruption in technology supply chains, hitting some of the biggest component-makers.

Intel, Qualcomm and Broadcom told their employees they will not provide products to Huawei until further notice.

Trade talks between Beijing and Washington deadlocked this month as Mr Trump accused China of backing out of a deal that was taking shape with US officials, saying China reneged on an agreement to enshrine a wide range of reforms in law.

Mr Trump increased levies on US$200 billion (S$275 billion) worth of Chinese imports to 25 per cent from 10 per cent, prompting retaliation from Beijing.

The US has said it is prepared to hit China with new tariffs even as Mr Trump said he will meet Chinese President Xi Jinping at next month's G-20 Summit in Japan, an encounter that could prove pivotal.

The Trump administration has offered a reprieve before to a Chinese telecoms company, ZTE, in a similar situation as Huawei.

Last year, it announced a seven-year ban on US exports to ZTE after it said the company violated sanction agreements by selling American technology to Iran and North Korea.

The ban forced ZTE to announce that it was shutting down. Mr Trump then reversed course, saying he was reconsidering penalties on ZTE as a personal favour to Mr Xi.

Shortly after, his administration announced it would allow the company to stay in business after paying a fine, changing its management and providing security guarantees.

Meanwhile, Huawei is seeking about US$1 billion from a small group of lenders, its first major funding test after getting hit with the US curbs.

The world's largest provider of networking gear is seeking an offshore loan in either US or Hong Kong dollars, said people familiar with the matter who asked not to be identified discussing private information. The company is targeting maturities of five and seven years, the people said.

The company's talks with lenders are still at an early stage, and there is no guarantee a deal will happen.

If it does, the loan's pricing - as well as the identities of the participating banks - could provide further clues on the mar-ket's perception of Huawei's financial strength.

Huawei's latest fund-raising attempt comes about four months after it obtained a loan of 14 billion yuan (S$2.8 billion) from five Chinese banks.

Last September, the company raised US$1.5 billion offshore from a group of 10 mostly international banks. </s> LONDON — U.S. President Barack Obama is poised to block a Chinese company from buying Germany’s Aixtron SE, people familiar with the matter said, which would mark only the third time in more than a quarter century that the White House has rejected an investment by an overseas buyer as a national security risk.

The president is expected Friday to uphold a recommendation by the Committee on Foreign Investment in the U.S. that the sale of the semiconductor-equipment supplier to China’s Grand Chip Investment GmbH should be stopped, according to the people who asked not to be identified as the details aren’t public.

Blocking the $714 million acquisition would mark the second time Obama has rejected a deal on national security grounds. The first was in 2012 when he stopped Chinese-owned Ralls Corp. from developing a wind farm near a Navy base in Oregon. Before that, in 1990 then-President George H.W. Bush stopped a Chinese acquisition of MAMCO Manufacturing Inc., an aircraft-parts maker.

The Committee on Foreign Investment in the U.S., or CFIUS, reviews purchases of U.S. companies by foreign buyers and pays particular attention to purchases of technology, especially when it has defense applications. It has a say in the Aixtron deal because the company has a subsidiary in California and employs about 100 people in the U.S., where it generates about 20 percent of its sales.

Aixtron technology can be used to produce light-emitting diodes, lasers, transistors, solar cells, among other products, and can have military applications in satellite communications and radar. Northrop Grumman Corp., a major U.S. defense contractor, is among its customers, according to a Bloomberg supply chain analysis.

The decision comes at a crucial moment for U.S.-China relations. President-elect Donald Trump has accused China of carrying out unfair trade practices that hurt U.S. workers. He has vowed to brand the country a currency manipulator and said he would impose tariffs on Chinese goods. Meanwhile, Chinese companies are investing more in the U.S. than ever. Chinese foreign direct investment in America reached a record $15.3 billion in 2015, according to Rhodium Group.

Notable investments by Chinese companies include the purchase of Smithfield Foods Inc. by WH Group Ltd. in 2013 and China National Chemical Corp.’s bid for Syngenta AG, which CFIUS cleared in August. Dalian Wanda Group Co. is expanding in Hollywood with its purchases of film producer Legendary Entertainment LLC and the second-biggest U.S. cinema operator, AMC Entertainment Holdings Inc.

CFIUS doesn’t comment on its reviews because they’re confidential. National Security Council spokeswoman Emily Home declined to comment, as did an Aixtron representative. Grand Chip didn’t immediately respond to emailed requests for comment, while the China phone number listed on its regulatory filings was disconnected.

Chinese investment in the U.S. has drawn growing concern from Capitol Hill. Lawmakers pushed the Government Accountability Office to review whether CFIUS’s scope should be expanded. Sen. Chuck Schumer, a Democrat from New York, also wrote to Treasury Secretary Jacob Lew saying that he’s concerned about the growing number of acquisitions of U.S. companies by Chinese state-owned buyers.

Schumer promised Congress would work on legislation to expand CFIUS’s oversight.

The U.S.-China Economic and Security Review Commission said last month in a report to Congress that CFIUS should be authorized to stop Chinese state-owned enterprises from acquiring U.S. companies, saying Beijing uses the firms as "a tool to pursue social, industrial and foreign policy objectives."

CFIUS determined Aixtron’s sale to Grand Chip Investment, announced in May, raised unresolved national security concerns and should be abandoned, Aixtron said Nov. 18. Aixtron and Grand Chip rejected that position and planned to continue negotiations with the government, according to the statement. By law, the U.S. president has 15 days to decide on a CFIUS matter after the panel completes its investigation and must issue an executive order to block a deal. CFIUS rulings are rarely referred to the president for a decision before being resolved in some other way.

When a deal raises security risks, the companies can try to negotiate conditions to resolve government concerns, such as a requirement that only U.S. citizens handle certain products and services. When CFIUS concerns can’t be resolved the sale is often abandoned rather than going to the president for a formal rejection.

———

 With assistance from Ben Scent, David Ramli and Justin Sink. Kirchfeld reported from London and McLaughlin from Washington.

 

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Citing national security concerns, U.S. President Donald Trump blocks Broadcom's proposed acquisition of Qualcomm.