Emulex fends off Broadcom once more

The company rejects Broadcom's attempt to take a $764 million offer directly to shareholders

Emulex has once again rejected an attempt by Broadcom to take over the company, reiterating its stance that the bid undervalues the company and does not adequately compensate its shareholders.

Emulex's board of directors on Friday formally rejected a tender offer to purchase Emulex directly from shareholders at US$9.25 a share, said Jeff Benck, COO of Emulex in an interview Friday.

Broadcom took the offer to shareholders on Wednesday after Emulex's board rejected an unsolicited bid to purchase the company for what would amount to about $764 million in cash. Broadcom made that bid public in a letter to Emulex shareholders on April 21.

Broadcom also had approached Emulex late last year about a deal but talks broke down in January.

"We really felt like this undervalued our long-term prospects as a company," Benck said. "It's an all-cash offer and based on the price that it's at, [shareholders] wouldn't have the benefit of the potential future growth of the company."

In an e-mailed statement, Broadcom disagreed, saying Emulex shareholders have a right to voice their opinions on the offer.

"We believe Emulex shareholders have a very clear choice between the attractive premium, all cash, highly certain value we are offering and Emulex's track record of underperformance," Broadcom said.

Both companies are based in Orange County, California - Emulex in Costa Mesa and Broadcom in Irvine.

Broadcom produces semiconductors used mainly in communications products, such as communications networks, cell phones and cable set-top boxes. Emulex also provides technology for connecting storage, servers and networks in data centers.

Another reason the board rejected the offer is that it feels Broadcom aims to take unfair advantage of Emulex after the latter's OEM design wins over Broadcom, Benck said.

Emulex recently unveiled some significant deals to place its converged storage- and data-networking technology in large OEM systems, though the names of those companies have not been announced publicly, he said. Broadcom was a competitor in these deals, Benck said.

Emulex typically works with large storage vendors like Hewlett-Packard, IBM and EMC.

"[The deals] are not driving revenue yet," he said, but they're significant because "the business we're in is about capturing the sockets and wins. ...[Broadcom] is the bigger guy, but we're winning against them in the marketplace."

Broadcom and Emulex did not compete when Emulex mainly offered storage networking and Fibre Channel products, but increased convergence of storage and data networks now puts them in head-to-head competitive situations, he added.

In its April 21 letter to the board, Broadcom cited Emulex's Fibre Channel expertise as one of the reasons it wanted to buy the company.

At the time, it said the two companies did not have much product overlap, another reason the deal would be beneficial to them and their shareholders.

Tags mergers & acquistionsbroadcomEmulex

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Elizabeth Montalbano

IDG News Service

Comments

Comments are now closed.

Latest News Articles

Most Popular Articles

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Resources

Best Deals on GoodGearGuide

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?