President Trump issued a presidential order barring Broadcom from purchasing Qualcomm.
"There is credible evidence that leads me to believe that Broadcom ... through exercising control of Qualcomm ... might take action that threatens to impair the national security of the United States," Trump wrote in the order. "The Purchaser and Qualcomm shall immediately and permanently abandon the proposed takeover."
The order represents a largely unprecedented action by a U.S. president to prohibit a proposed financial transaction.
The order comes just hours after Broadcom sought to avoid the purview of the Committee on Foreign Investment in the United States (CFIUS) by relocating its headquarters from Singapore to the United States. Indeed, Broadcom's CEO Hock Tan announced Broadcom's plans to relocate at a press event with Trump in November. Broadcom this morning said it would speed up its relocation plans to finish the effort by by April 3. That would make Broadcom a U.S. company two days before Qualcomm’s rescheduled annual meeting of stockholders, where Broadcom hoped to put its directors up to a vote.
But Trump's order put a clear hold on that strategy.
"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," the order states. "Qualcomm shall hold its annual stockholder meeting no later than 10 days following the written notice of the meeting provided to stockholders under Delaware General Corporation Law, Title 8, Chapter 1, Subchapter VII, section 222(b), and that notice shall be provided as soon as possible."
Broadcom launched its unsolicited attempt to purchase Qualcomm in November, embarking on an attempt to close what would be the tech industry's biggest transaction ever. But the U.S. government, through the Committee on Foreign Investment in the U.S. (CFIUS), put a halt on the proceedings last week due to national security concerns, arguing that Qualcomm operated substantial business with the U.S. government and that the company played a critical role in the United States' position in the development of 5G technology.
The action has been widely seen as a proxy battle between the United States and China, which has been investing heavily into 5G technology. It also comes just days after Trump imposed hefty tariffs on imports of steel and aluminum.