KUALA LUMPUR (Nov 20): The Edge weekly in its latest edition reported that on Thursday, Nov 2, US President Donald Trump unveiled his signature tax reform plan in the Oval Office at the White House.
North America-based technology write Assif Shameen wrote in the magazine that Trump was flanked by Penang-born Tan Hock Eng, 65, CEO of Singapore-based, San Jose-run, communications chip firm Broadcom, which has a market capitalisation of US$106 billion.
The weekly quoted Tan as telling Trump and and the White House audience that Broadcom was ready to “make America home again” as it relocates from Singapore to Delaware.
“My mother could never have imagined that one day her son would be here in the Oval Office standing beside the president of the United States,” it reported Tan as saying.
The Edge said each needed the other. Trump needed a CEO who was willing to say his tax reform proposals would do what they are supposed to and Tan needed the White House’s seal of approval for the next leg of his acquisition spree.
Tan who? And Broadcom? Most Malaysians and Singaporeans may not have heard of him until recently but Tan, who briefly ran mid-sized, Kuala Lumpur-based, construction materials firm Hume Industries in the mid-1980s, is CEO of one of the largest, fastest-growing and — because of its acquisitive ways — increasingly the most-feared technology companies in the world.
The weekly said that measured by market capitalisation, Broadcom is the largest Singapore company, though it is listed on Nasdaq.
It added that Tan was a long-time Singapore permanent resident and ran a venture capital firm here between 1988 and 1992 before he relocated to the US.
The weekly stressed that a key plank of Trump’s argument has been that tax reforms would bring back nearly three trillion dollars of profits that US companies have stashed overseas to avoid paying taxes, and end corporate inversion — the practice of relocating a company’s legal domicile to a lower-tax nation, or tax haven, while retaining its key operations in its higher-tax country of origin.
It said Tan’s Oval Office appearance was a prequel to many things.
“Within hours, news leaked out that Broadcom was mounting an unsolicited bid for Qualcomm at US$70 a share (US$60 in cash and US$10 in stock), a 28% premium, which values it at US$105.3 billion, the largest takeover deal in the history of technology,” it reported.
It explained that Qualcomm’s board promptly rejected the offer, saying it “dramatically undervalues” the firm, whose stock was trading around US$80 last year before its long-standing legal tiff with one of its biggest clients, Apple, spilled over into the courtrooms.
Citing Amit Daryanani, analyst for RBC Capital Markets in San Francisco, it said he expects a proxy battle to ensue and Tan to eventually win, as long as he can sweeten his initial offer.
The Edge said Qualcomm’s board and shareholders may be holding out for 15% more than the original offer. Somewhere between US$115 billion and US$120 billion, or US$77 to US$82 a share, the deal gets done, say semiconductor analysts in New York and San Francisco who have spoken to The Edge Singapore in recent days.
Broadcom is one of two Nasdaq-listed tech giants that have long maintained their legal headquarters in Singapore (contract manufacturer Flex, formerly Flextronics, being the other), partly for historic and partly for tax reasons, even though they have always been run from their Silicon Valley operational headquarters. But with tax reforms looming in the US, which will cut corporate taxes to just 20%, many CEOs, such as Broadcom’s Tan, believe there is little sense in maintaining a legal or tax presence in Singapore.
For more on the journey of the “skinny kid from Penang” to the White House and more, read the Edge for the week of Nov 20- Nov 26 available at newsstands now, or save by subscribing to us for your print and/or digital copy.
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Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.