President Donald Trump on Monday blocked [executive order] the hostile takeover of mobile chip giant Qualcomm by Singapore-based Broadcom [corporate websites].
The executive order notes that Section 721 of the Defense Production Act [text, PDF] allows the president and the Committee on Foreign Investment in the US (CFIUS) [official website] to review, investigate, and take action as necessary when a company under the authority of a foreign government threatens national security. Trump said that “[t]here is credible evidence that leads me to believe that … [Broadcom] might take action that threatens to impair the national security of the United States[.]”
Specifically, the order prohibited Broadcom’s takeover of Qualcomm, or any substantially similar merger, and any of the 15 listed Broadcom candidates from standing for election as directors of Qualcomm. The order further directed measures to protect company shareholders, stating:
[Broadcom] shall uphold its proxy commitments to those Qualcomm stockholders who have returned their final proxies to [Broadcom], to the extent consistent with this order … 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 … and that notice shall be provided as soon as possible.
The order further stated additional reporting and notice requirements as to Broadcom and Qualcomm.