That, in turn, would let China dominate 5G wireless and leave Americans vulnerable. CFIUS also said that Broadcom defied an interim order requiring that it give a panel 5 business days' notice before it took steps to officially relocate to the US. We've asked both Broadcom and Qualcomm for comment, although Broadcom had previously said it was in "full compliance" with the temporary order. To put it mildly, things aren't looking good for Broadcom. There was a chance it could have escaped CFIUS' scrutiny by claiming that the takeover fell outside of its jurisdiction, but that opportunity is gone now -- as long as Trump's order holds, the deal is off.
President Donald Trump is blocking Singapore-based Broadcom's takeover of U.S. chipmaker Qualcomm on national security grounds. The White House says Trump is taking the action on the recommendation of the Committee on Foreign Investment in the United States, which reviews foreign purchases of U.S. entities. Broadcom made an unsolicited bid last year to take over Qualcomm, which has been met by shareholder skepticism and regulatory scrutiny on security and antitrust grounds. Broadcom is in the process of moving its legal headquarters from Singapore to the U.S., with the company planning on finishing the move by April 3, 2018. Trump hosted Broadcom CEO Hock E. Tan in the White House last year as he announced the move, and the company had hoped that would help it skirt the national security review.
The Qualcomm news is significant because it signals that the company's board is trying to make an independent decision in regard to the merger. While Henderson has been on Qualcomm's board since 2016, he's not tied to the company and can steer decision making in the direction that's the best interest of Qualcomm and its shareholders. Meanwhile, Broadcom is in defensive mode with its letter to Congress outlining why its proposed $117 billion acquisition of Qualcomm would be a good thing. According to The Wall Street Journal, Broadcom promised not to sell "any critical national security assets to any foreign companies," which is probably a good thing. The main issue that has long been in the way of the Broadcom-Qualcomm merger is pricing.
The unsolicited proposal was expected to be rejected by Qualcomm, and as of this morning, it has been. The company's board of directors unanimously voted against Broadcom's bid saying that it undervalued Qualcomm. "It is the board's unanimous belief that Broadcom's proposal significantly undervalues Qualcomm relative to the company's leadership position in mobile technology and our future growth prospects," Paul Jacobs, Qualcomm's chairman of the board, said in a statement. Qualcomm CEO Steve Mollenkopf added that the company's technology -- its 5G tech in particular -- puts it in a position to generate additional value for stockholders beyond what Broadcom's bid suggests, and Qualcomm's director, Tom Horton said, "We are highly confident that the strategy Steve and his team are executing on provides far superior value to Qualcomm shareholders than the proposed offer." This is unlikely to be the end of the attempted takeover, however.