ibusinesslines.com
ibusinesslines.com June 18, 2018


Broadcom confirms it has withdrawn its Qualcomm bid

14 March 2018, 08:32 | Justin Tyler

Broadcom confirms it has withdrawn its Qualcomm bid

Broadcom confirms it has withdrawn its Qualcomm bid

Chip-maker Broadcom has withdrawn its bid for rival Qualcomm, two days after US President Donald Trump declared he would block the $142bn (£104bn) deal.

But the United States is anxious that a takeover would dramatically reduce investment and research at Qualcomm, giving an advantage to China. Things went hostile a month later when Broadcom revealed it would target Qualcomm's shareholders directly and ask them to elect a new slate of directors chosen by Broadcom, and Broadcom later went on to submit a revised $121 billion bid last month.

In addition, lawmakers have expressed concerns in the past about foreign companies gaining a foothold in us telecom infrastructure, which could lead to spying or cybertheft.

The Committee on Foreign Investment in the United States, which reviews the national security implications of foreign investments in US companies, cited concerns about Broadcom's penchant for cutting costs such as research spending.

"The case against the acquisition is inherently tied to the argument that the transaction could adversely impact US control of the pace and progress of the development of 5G technologies", he said. Companies including Qualcomm and China's Huawei have been investing heavily to stake their claim in the underlying technology. "This is in large part because of a weakening of Qualcomm's position would leave an opening for China to expand its influence on the 5G standard-setting process".

"Details of the security risk are likely around 5G cellular technology [where] Qualcomm, in our view, is well ahead of foreign and domestic competitors", said Stifel analyst Kevin E. Cassidy in a report late Monday.

"(The) investigation has so far confirmed the national security concerns", the panel told the company via a letter.


Congress issued a critical report on the Chinese tech firm in 2012 that effectively shut it out of the United States market. European-based companies could do the same, too.

Trump may not get to build the network himself, but he's sure not going to leave it to China to build it for us.

Broadcom thanked both its own stockholders and Qualcomm stockholders, some of whom have expressed concern at the future of the company.

However, Broadcom hit back, saying it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns".

"5G is a core piece of the franchise Broadcom is trying to purchase", Bernstein analyst Stacy Rasgon wrote in a note to clients before the deal was blocked.

"The cases [against the deal] as laid out feel very weak to us, but politics is politics", Rasgon wrote earlier in March.



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