US President Donald Trump issued an executive order Monday blocking Broadcom Ltd. from pursuing its hostile takeover of Qualcomm Inc., scuttling a $117 billion deal that had been scrutinized by a secretive panel over the tie-up’s threat to US national security.
Trump acted on a recommendation by the Committee on Foreign Investment in the US, which reviews acquisitions of American firms by foreign investors. The decision was unveiled just hours after Hock Tan, the chief executive officer of Singapore-based Broadcom, met with officials at the Pentagon in a last-ditch effort to salvage what would have been the biggest technology deal in history.
“There is credible evidence that leads me to believe that Broadcom Ltd.,” by acquiring Qualcomm, “might take action that threatens to impair the national security of the United States,” Trump said in the order released Monday evening in Washington.
The order underscores the tough stance the Trump administration is taking on foreign takeovers of US technology firms. In September, he blocked the sale of Lattice Semiconductor Corp. to a Chinese-backed investor. That was just the fourth time in a quarter century that a US president stopped a foreign takeover of an American firm on national security grounds. At least a half-dozen technology deals have collapsed during the Trump administration in the face of concerns raised by CFIUS.
Broadcom said in a statement it was reviewing the order and that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.” Qualcomm didn’t respond to requests for comment.
The order marked an unprecedented move by the White House to stop a hostile bid for a company. Broadcom didn’t have an agreement to buy San Diego-based Qualcomm. It was fighting to win support from Qualcomm shareholders to gain control of its rival’s board and move forward with its offer. Before waiting for an actual deal, CFIUS opened an investigation to review the risks to national security.