The order further requires both Broadcom and Qualcomm to certify with the CFIUS that the takeover effort has been terminated, and to provide details with "a timeline for projected completion of remaining actions". The order said, "The proposed takeover of Qualcomm by the Purchaser [Broadcom] is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited".
Broadcom in Cambridge is anchored on the Science Park while Qualcomm is based at Cambridge Business Park just across the road.
CFIUS is a federal inter-agency committee with broad authority to review transactions and investments that could result in "control" (very broadly construed) of a US business by a foreign person. At the time, US President Donald Trump called it "one of the really great, great companies". Many foreign companies and investors thus seek CFIUS clearance prior to acquiring or investing in USA companies.
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Broadcom issued a statement after hearing the White House's decision stating that it "is reviewing the order" and underlining its "total disagreement" with the claim that the proposed transaction represents a problem for U.S. national security.
While the legality of these procedural skirmishes will be debated, the broad policy strokes are evident. But the White House feels that the risk of America losing clout in 5G technology and similar fields rises to the level of a national security threat. While the president did not provide a detailed rationale, a March 5 letter from the Treasury Department calling for a review of the deal said that the administration was concerned about Broadcom's relationships with other foreign companies.
"This decision is based on the facts and national security sensitivities related to this particular transaction only and is not meant to make any other statement about Broadcom or its employees, including its thousands of hard working and highly-skilled USA employees", Broadcom said.
In a statement, Broadcom said that it would comply with Trump's order, formally abandoning what would have been the biggest takeover in the history of the technology industry.
As of now, it is not clear if such a move from the Singapore-based company will win Trump's approval. The agency believes that the acquisition would give a foreign entity control of a USA business. The "national security" defense used to deflect the hostile takeover may turn out to be a double-edged sword.