BROADBAND BREAKFAST INSIGHT: A great summary of what to take away from the Trump administration’s blocking of Broadcom’s acquisition attempt for Qualcomm, an action that appears to be have been taken quite precipitously. According to The New York Times’ story on the subject, “A presidential action against foreign investment in an American company is rare and has only taken place four times in the past 30 years, according to the law firm Ropes & Gray.”
The fallout from Qualcomm’s victory, from Axios
President Trump last night took Broadcom out back and slaughtered its $117 billion pursuit of Qualcomm, in the name of national security.
For capital markets, this is unprecedented. A deal that didn’t even exist has been blocked by a U.S. president, who also apparently has the power to determine who can and can’t stand for election to a private-sector company’s board of directors. And all of it was enabled by a regulatory body focused on foreign acquisitions of U.S. companies, even though the acquirer was scheduled to stop being “foreign” in just a few weeks.
For Broadcom, this is an unanticipated disaster. It got outplayed in D.C. by Qualcomm, and used by the White House as a proxy in the IP protection fight to come against China.
For Qualcomm, this sweet relief is only temporary. Its stock had never gotten close to Broadcom’s offer price and plenty of shareholders wanted to replace the entire board. And it still hasn’t been able to complete its own deal with NXP Semiconductors, nor settle its legal battles with Apple.
For Intel, this is opportunity. It could just rest easy, or could make a play for either Broadcom or Qualcomm. The former makes more strategic sense — and likely would create fewer anti-trust headaches — but it might not be able to resist the siren song of the latter’s willing shareholders.