Broadcom move to the US – a waste of time?

Broadcom’s decision to kick off a redomiciliation process to the US was a pragmatic move to get in the good books of the government, but now Trump has killed the Qualcomm acquisition, is there any point?

There are of course benefits to shifting the corporate headquarters to the tax shelter of Delaware, but then there are will also be benefits to having the corporation located in Singapore. This small city-state also offers corporates notable tax benefits, has an incredibly friendly business ecosystem, has 21 bilateral and regional Free Trade Agreements in force and 41 Investment Guarantee Agreements, excellent intellectual property protection laws and easy access to funding. When you take all this into account, some might assume the move to the US was nothing more than a shoulder rubbing exercise than a financial decision.

Broadcom announced plans to move its headquarters to the US prior to the beginning of the Qualcomm acquisition talk. Rumours were beginning to surface, but confirmation (and the beginning of the soap opera) was yet to arrive. The press conference announcing the redomiciliation process even managed to grab the attention of Trump, who was able to leave his Twitter account for a couple of minutes to stand stoically behind Broadcom CEO Hock Tan. At the time, Trump commented Broadcom was one of the “one of the really great, great companies.”

Considering the troubles being faced by AT&T during its own monster-acquisition, trying to get into the good books of the US government is not necessarily a bad idea, especially if you are about to kick off the biggest acquisition ever. Redomiciliation is of course an excellent way to do this as the President seems to be measuring success on how much money and corporations he can tempt back to American shores, but then he screwed over his new pal.

Tan must be looking at the situation now, assuming of course that pragmatism ahead of the acquisition was a driver for the redomiciliation, wondering what the point was. Why bother stroking the egos of shallow and polished politicians just to be cut down. This is the fifth time a President has blocked an acquisition after taking advice from the Committee on Foreign Investment in the United States, the second instance since Trump took office.

This is not to say the redomiciliation decision will be reversed. It might be a fair bet to assume Tan has the acquisition taste and might go chasing another, smaller US target. Perhaps the waves of repercussion won’t be as large this time meaning there won’t be as much scrutiny, but having the government on side will still certainly be a plus.

On a side note, perhaps we should not be surprised about Trump’s decision to ban the acquisition on the ground of paranoiaprotectionismpatriotism national security, even if he seemed chummy with Tan. President Trump does not seem to be too bothered about offending if it achieves his own personal, short-term objectives. It will be interesting to see whether this approach to relationships comes back to bite in the future.