Two days after Donald Trump signed a presidential order prohibiting Broadcom from acquiring rival Qualcomm, Broadcom has not only formally dropped its Qualcomm takeover bid but also has pulled its nominees for the latter company’s board of directors.
In case you hadn’t heard, Broadcom has been trying to purchase Qualcomm since late last year, with Qualcomm resisting at every corner. Broadcom’s latest move was to try and get new members elected to the Qualcomm board of directors in order to try and take over the company from within. Other industry giants expressed concern with the proposed takeover and it seems like the White House heard their concerns and investigated the acquisition attempt.
On Monday, a press release from the White House, for all intents and purposes, put an end to Broadcom’s takeover attempt.
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:[…]
_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[…]
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.
Initially, Broadcom issued a terse press release stating that they strongly disagreed that its acquisition of Qualcomm was a threat to national security. The company was hoping that their current process of moving its headquarters back to the U.S. would be enough to alleviate the concerns put forth by the federal government. However, the company issued another press release indicating that they were withdrawing their offer to acquire Qualcomm, but would still be moving forward with its redomiciliation process.
Although we are disappointed with this outcome, Broadcom will comply with the Order. Broadcom will continue to move forward with its redomiciliation process and will hold its Special Meeting of Stockholders as planned on March 23, 2018.
Broadcom’s Board of Directors and management team sincerely appreciate the significant support we received from the Qualcomm and Broadcom stockholders throughout this process.
Broadcom thanks the independent nominees who stood for election to the Qualcomm board, not only for their time and effort but also for their unwavering commitment to act in the best interests of Qualcomm stockholders.
Broadcom appreciates the following statement from U.S. Treasury Secretary and CFIUS chair Steven Mnuchin on March 12: “This decision is based on the facts and national security sensitivities related to this particular transaction only and is not intended to make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled U.S. employees.”
What do you think about the decision from the White House and Broadcom’s subsequent dropping of their acquisition attempt of Qualcomm? Let us know in the comments below or on Google+, Twitter, or Facebook.Source: White House Public Pool Source: Broadcom