Broadcom Launches Bid for Emulex
Chip maker Broadcom claims the $764 million all-cash offer is not a hostile takeover bid, despite a lawsuit to block a poison pill provision and a not-so-friendly letter to Emulex's board. Broadcom wants Emulex for its technology used in transporting information from data centers to storage systems.Chip maker Broadcom launched an unsolicited takeover bid April 21 to acquire Emulex, a developer of converged network solutions for data centers. Broadcom offered Emulex $9.25 per share in an offer valued at $764 million. The offer represents a 40 percent premium over Emulex's April 20 closing price of $6.61.
Broadcom claimed the offer was not a hostile takeover bid, but also filed a lawsuit to block a poison pill provision approved by Emulex following the January collapse of negotiations between the two companies.
"As you know, we have believed for some time that a combination of our two companies would benefit both companies' shareholders and the customers we serve," Broadcom President and CEO Scott A. McGregor wrote in a letter to the Emulex board. "With that strategic opportunity to meet the needs of the market in mind, we sought to engage you and your board of directors in discussions in late December regarding a potential combination of Emulex with Broadcom. We were disappointed when, in early January, you responded that the company was not for sale and abruptly cut off the possibility of further discussions."
In a press statement released April 21, Emulex said, "The board will review the proposal in due course" and noted, "there is no need for Emulex stockholders to take any action at this time."
Broadcom said its preference is to proceed in a "friendly, collaborative manner, and we hope that Emulex's board will see the merits of this combination and appreciate the substantial value being offered to its shareholders."
Broadcom especially values Emulex for its technology used in transporting information from data centers to storage systems.
"A combination of Broadcom and Emulex addresses our customers' growing need to apply the economics of Ethernet to the Fibre Channel storage space to achieve low-cost network converged solutions," McGregor said in a statement. "The logical evolution of the enterprise network is for a transition to a converged fabric architecture that incorporates a broad array of technologies."