WASHINGTON — President Trump on Monday blocked Broadcom’s $117 billion bid for the chip maker Qualcomm, citing nationwide safety considerations and sending a transparent sign that he was prepared to take extraordinary measures to advertise his administration’s more and more protectionist stance.

In a presidential order, Mr. Trump mentioned “credible proof” had led him to consider that if Singapore-based Broadcom have been to amass management of Qualcomm, it “would possibly take motion that threatens to impair the nationwide safety of america.” The acquisition, if it had gone via, would have been the biggest know-how deal in historical past.

Mr. Trump’s determination to ban the blockbuster deal underscored the lengths that he’s prepared to go to shelter American firms from international competitors. In latest weeks, the president has turned to an arsenal of instruments — together with tariffs and an obscure authorities assessment panel — to keep at bay international management in American industries and, particularly, thwart the rise of China.

The president has centered many of those actions on the know-how trade. Whereas america has lengthy claimed a bonus in tech, it’s now dealing with emboldened rivals in China, the place the federal government has closely invested in all the pieces from semiconductors to wi-fi networks to synthetic intelligence. By its latest actions, the White Home has revealed its view that the nation’s nationwide safety is tied to its development of these applied sciences.

Nationwide safety was additionally cited by Mr. Trump final week when he accepted stiff and sweeping tariffs on imported metal and aluminum, saying these imports have been a risk to American manufacturing. Mr. Trump singled out Chinese language metal as a key consider his determination; he has mentioned that China has routed metal via different international locations and flooded america with low cost metallic.

“There’s a notion throughout the administration that China doesn’t economically have interaction pretty with america and this motion reveals it can train numerous treatments to regulate the enjoying subject to even the Sino-U.S. financial relationship,” mentioned Tony Balloon, the pinnacle of the China company consulting apply on the legislation agency Alston & Chook.

Mr. Trump was given a gap to dam Broadcom’s bid for San Diego-based Qualcomm earlier this month. That was when the Committee on International Funding in america, or Cfius, a authorities panel that usually works behind closed doorways and evaluations offers solely after they’re introduced, mentioned it will stall Broadcom’s bid due to nationwide safety considerations whereas it examined the deal.

Hock Tan, Broadcom’s chief govt, talking alongside President Trump on the White Home in November. Days later the corporate introduced that it needed to purchase Qualcomm.Credit scoreEvan Vucci/Related Press

Broadcom mentioned it was reviewing Mr. Trump’s order, and disputed the notion that the bid posed a safety risk.

“Broadcom strongly disagrees that its proposed acquisition of Qualcomm raises any nationwide safety considerations,” an organization spokesman mentioned in a press release.

Whereas Broadcom relies in Singapore, China was the primary concern that drove Mr. Trump’s determination over the Qualcomm deal, as a result of permitting an American know-how firm to be acquired would cede its primacy within the semiconductor and wi-fi trade.

Steven Mnuchin, the Treasury Secretary, mentioned in a press release that the choice was a part of the administration’s “dedication to take all actions crucial to guard the nationwide safety of america.”

He mentioned the order was primarily based “on the details and nationwide safety sensitivities associated to this explicit transaction solely and isn’t meant to make some other assertion about Broadcom or its staff, together with its hundreds of exhausting working and extremely expert U.S. staff.”

But the order will undoubtedly elevate questions in regards to the extent to which the Trump administration is prepared to intervene in private-sector selections. Whereas Qualcomm opposed Broadcom’s bid and had reached out to the international funding committee for a assessment, the proposal was nonetheless headed to the corporate’s shareholders for a vote. The international funding committee intervened earlier than that would occur, refusing to let the shareholder assembly happen till after it had an opportunity to analyze.

John P. Kabealo, an legal professional who makes a speciality of international funding issues, mentioned it was “extraordinary” that Mr. Trump would intervene within the transaction earlier than a full investigation by the federal government panel was full.

“It definitely aligns with the administration’s willingness to be extra energetic in commerce and implementing protectionist insurance policies,” he mentioned. “It’s undoubtedly a way more activist coverage than the earlier administration.”

Mr. Kabealo mentioned the president’s order may dramatically change the world of mergers and acquisitions and open the door to the likelihood that extra bankers and attorneys would use evaluations by the international funding committee to dam hostile takeovers on nationwide safety grounds.

The president mentioned his determination to dam Broadcom’s bid had been primarily based on the assessment by the international funding committee. The panel had mentioned that the management of Qualcomm, which makes wi-fi chips and likewise licenses key wi-fi patents, was too necessary to let go of. The committee argued that financial management in next-generation high-speed cellular networks often called 5G, wherein Qualcomm is a key participant, was additionally a nationwide safety curiosity.

“China would seemingly compete robustly to fill any void left by Qualcomm because of this hostile takeover,” a United States Treasury official wrote in a letter to the businesses final week.

As a part of the presidential order, america additionally barred the 15 people who Broadcom had proposed for Qualcomm’s board from operating, saying they have been “disqualified from standing for election as administrators of Qualcomm.”

Qualcomm acknowledged receiving the presidential order and mentioned it had been advised to reconvene its shareholder assembly on the earliest doable date, March 23.

A presidential motion in opposition to international funding in an American firm is uncommon and has solely taken place 4 instances previously 30 years, in line with the legislation agency Ropes & Grey. Scrutiny of international firms shopping for United States property ramped up below President Barack Obama, together with a presidential order barring a Chinese language firm from buying Aixtron, a German firm with American property, on nationwide safety grounds in 2016.

Below Mr. Trump, a number of offers involving international consumers have been squelched after a assessment by the international funding committee, together with Moneygram’s sale to an affiliate of the Alibaba Group and Lattice Semiconductor’s sale to an funding agency with reported ties to the Chinese language authorities. However the motion in opposition to Broadcom was uncommon as a result of mergers are hardly ever killed earlier than a publicly traded firm’s shareholders are given the prospect to resolve on the provide for themselves.

The choice was a blow to Broadcom, which below its chief govt, Hock Tan, has constructed itself up via a number of acquisitions. Mr. Tan had gone to nice lengths to deflect considerations by American regulators and the Trump administration, together with showing in a televised speech on the White Home with Mr. Trump final November, throughout which Mr. Tan promised to redomicile Broadcom in america.

Broadcom had at one level in its negotiations with Qualcomm additionally supplied to up its provide to amass the corporate. After the international funding committee introduced its investigation into the Qualcomm bid this month, Broadcom hastened plans to maneuver its headquarters to america and despatched a letter to lawmakers promising it will not sluggish analysis and improvement in 5G networking know-how if the merger have been accepted.

Observe Cecilia Kang and Alan Rappeport on Twitter: @ceciliakang and @arappeport

Michael de la Merced contributed reporting from New York.

A model of this text seems in print on , on Web page A1 of the New York version with the headline: Trump Blocks Abroad Takeover of Qualcomm. Order Reprints | As we speak’s Paper | Subscribe


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