Broadcom withdraws offer to acquire Qualcomm

Broadcom (AVGO) has withdrawn its offer to acquire Qualcomm (QCOM), also withdrawing its director nominees for Qualcomm’s board.

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QCOM QUALCOMM INC. 202.44 +2.58 +1.29%

Broadcom’s announcement follows Monday’s move by U.S. President Donald Trump to block Singapore-based Broadcom’s $117 billion bid to acquire Qualcomm on national security grounds.

“There is credible evidence that leads me to believe that Broadcom Limited…through exercising control of Qualcomm Incorporated, a Delaware Corporation, might take action that threatens to impair the national security in the United States,” Trump wrote in an executive order on Monday.

Commenting on the withdrawn offer, Broadcom said, “Although we are disappointed with this outcome, Broadcom will comply with the Order. Broadcom will continue to move forward with its redomiciliation process and will hold its Special Meeting of Stockholders as planned on March 23, 2018.”

Trump’s order came shortly after the Committee on Foreign Investment in the United States (CFIUS) wrote to both companies that the deal was a national security concern, adding that Broadcom had violated its rules “on at least three separate occasions.”

The writing was on the wall in early March when the U.S. government stepped in at the 11th hour to delay the Qualcomm shareholder meeting where it was expected Broadcom would make steps toward securing the deal with some of its proposed board candidates expected to be elected to the Qualcomm board.

Broadcom then announced that it would spend $1.5 billion to make the U.S. the global leader in 5G, but it wasn’t enough.

A key concern about the deal was the risk of the U.S. falling behind to China in developing 5G wireless technology.