“Any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.”
By Wolf Richter of WOLF STREET
President Trump signed a far-ranging executive order late Monday that blocked the $117-billion hostile takeover of Qualcomm by Broadcom, a Singapore-based company, on concerns over national security. This crushed any hopes that remained in some corners of seeing what would have been the largest tech deal ever. But the order was far broader: It blocked all such deals.
The original Broadcom was a storied American company, dating back to the 1960s when it was part of Hewlett-Packard. It was turned lose in the 1990s as part of the dismantling of H-P and IPO’ed in 1998 as one of the dotcom darlings.
In May 2015, Singapore-based chipmaker Avago Technologies announced that it would acquire Broadcom for $37 billion, the largest tech deal since the dotcom bubble. Thus Broadcom became a subsidiary of a foreign company that then took on Broadcom’s name. Then it was Qualcomm’s turn. Just imagine the fees for Wall Street, which loves these mega-deals.
But the Trump White House is not so enamored with these foreign takeovers of US tech companies. Trump’s order said this:
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 it isn’t just Broadcom that is targeted with this order. It’s all foreign takeovers of large US tech companies…