President Donald Trump on Monday blocked Broadcom's proposed $117 billion acquisition of rival chipmaker Qualcomm, saying the deal threatened to "impair the national security" of the US.
"The proposed takeover of Qualcomm by the Purchaser is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited," Trump wrote in an order, which directs both companies to immediately abandon the proposed deal.
Trump's order follows the lead of the Committee on Foreign Investment in the United States, a government panel that reviews mergers that could result in a foreign company controlling an American business. The panel, also known as Cfius, earlier this monthout of concern for Broadcom's relationships with foreign entities.
Broadcom said in a statement it's reviewing Trump's order and that it "strongly disagrees" that the proposed acquisition raises any national security concerns.
The proposed merger of the two companies was billed as the largest-ever tech acquisition, creating a chip giant that could supply components to a wide array of electronic gadgets found in your home or pocket. A deal would've also marked a surprising turnaround from nearly a decade ago, when the companies were bitter courtroom rivals.
San Diego-based Qualcomm, the world's largest maker of chips and processors for phones, rejected a revised, $121 billion buyout in February. Talks grew more contentious a few weeks later when Broadcom lowered its buyout offer for Qualcomm to approximately $117 billion, making "an inadequate offer even worse."
Cfius' call for an investigation was prompted by concern the deal could weaken "Qualcomm's technological leadership," according to a letter from a United States Treasury official.
"China would likely compete robustly to fill any void left by Qualcomm as a result of this hostile takeover," the official said in the letter. A Cfius review is often enough to quash a deal.
Qualcomm said it would reconvene its annual shareholders meeting on March 23 and noted that all of Broadcom's director nominees had been disqualified by Trump's order.
Shares of Qualcomm fell close to 5 percent in after-hours trading following the announcement. Broadcom shares were up slightly.
Updated at 6 p.m. PT with statements from Broadcom and Qualcomm.
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