Broadcom boss 'will beat Trump deal block'

Trump blocks Broadcom from acquiring Qualcomm

Trump blocks Broadcom from acquiring Qualcomm

Trump Blocks Broadcom, Qualcomm Merger Citing National Security Concerns President Trump issued an unusual executive order to block a merger - a massive bid by Singapore-based chipmaker Broadcom to buy America's largest mobile chipmaker Qualcomm.

While the move marks the largest defeat in Broadcom CEO Hock E. Tan's career, it's unlikely to impact the firm's modus operandi in the future, some analysts believe, noting how aggressive M&A pursuits were the primary reason why Avago grew from a $3.5 billion company in 2009 to one that's now valued at over $100 billion.

Analysts said Broadcom can still build heft through smaller deals.

Broadcom and Qualcomm could not be immediately reached for comment.

San Diego-based Qualcomm evolved from a USA military aerospace contractor to become the dominant player in wireless radio technology over the past two decades, with its chips used in half of all smartphones.

Broadcom had planned since a year ago to relocate its legal headquarters to the United States, avoiding the need for a CFIUS review.

Qualcomm's dominance of baseband chips that connect phones to networks would have represented the crown jewel in Broadcom's portfolio of communications chips that supply wi-fi, graphics, video and networking features alongside baseband chips. While the still-Singapore-based company is now expected to drop the idea of a Qualcomm acquisition so as to not clash with Washington directly, it may already make new M&A moves in the coming months, with a number of industry watchers pointing to Israeli Mellanox Technologies and American Xilinx as its possible targets following the failure of its last takeover attempt.

Broadcom has ample firepower for smaller deals, with about $11 billion in cash and the potential to generate almost $9 billion in annual free cash flow, analysts estimate.

CFIUS, which raised concerns about the Qualcomm deal with Trump, listed the highly leveraged nature of Broadcom's bid for its larger rival as a major concern coupled with the risk of the USA losing mobile technology leadership.

Before Trump's order, Broadcom had planned to relocate its legal headquarters to the United States, avoiding the need for a CFIUS review.

"But that really hinges on completely severing the foreign ownership connection, and they would probably have to endure a pretty deep dive on the first deal".