President Donald Trump issued an executive order Monday blocking Broadcom's takeover of Qualcomm, citing national security.
Shares of Qualcomm sank more than 5% in early trading Tuesday after President Donald Trump, citing national security, blocked Broadcom's proposed buyout of the chipmaker in an executive order late Monday.
The highly unusual order effectively squelches what could have been the largest technology acquisition of all time. Trump said there was "credible evidence" that Broadcom "might take action that threatens to impair the national security of the United States."
The deal was under scrutiny by a national security panel called the Committee on Foreign Investment in the United States, which advises Trump. The panel was concerned with what has been described as a hostile takeover of Qualcomm by Broadcom after several failed attempts.
Broadcom had claimed power with an attempt to take over Qualcomm's 11-member board with six of its own nominees. Trump's order blocks those nominees and orders the rescheduling of a stockholder meeting, which Qualcomm said would take place March 23.
Broadcom, which is incorporated in Singapore but trades on the Nasdaq exchange, was up about 1% early Tuesday as Wall Street worked out the full ramifications of the White House's action.
"While Broadcom could look to challenge this move in theory, the Trump edict essentially kills any chances of this deal happening," the GBH Insights analyst Dan Ives wrote in a note to clients on Monday.
Shares of the San Diego-based Qualcomm are down 8% this year, while shares of Broadcom are down about 1.6%.
In a statement, Broadcom vowed to fight the order, saying it "strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns."
Intel, which competes directly with both Qualcomm and Broadcom, was up 2.1% at the time of writing. The merger would have created a very large competitor for the US chipmaker.