Emulex President and CEO Jim McCluney in a letter to stockholders calls Broadcom's offer inadequate and proof that Broadcom that has fallen behind Emulex in the converged networking space.Converged networks developer Emulex sent a letter May 26 to stockholders
urging them to reject the unsolicited, nonbinding $9.25-per-share offer from
Broadcom, which initiated a $764 million takeover offer in May. Emulex has characterized
the offer as a lowball attempt in a down market.
Broadcom's $9.25 per share represents a 40 percent premium over Emulex's April
20 closing price of $6.61 per share. Broadcom has maintained that the offer is
not a hostile takeover bid, but filed a lawsuit to block a poison pill that the
Emulex board approved. In addition, Broadcom is also seeking from Emulex
stockholders a preliminary consent solicitation statement to amend Emulex's
bylaws to allow stockholders to call a special meeting.
"We are pleased to hear from the stockholders we have spoken with that you
agree that Broadcom's offer significantly undervalues Emulex and that it is an
opportunistic attempt to capture significant value that rightly belongs to all
of you. We continue to strongly urge you to not
tender your shares into Broadcom's tender offer," Jim McCluney, Emulex's
president and CEO, wrote in the May 26
letter.
Calling the Broadcom offer "grossly inadequate," McCluney said
Broadcom's tactics prove Emulex has an early lead over Broadcom in the
converged networking space and show Broadcom's inability to effectively
compete.
"Converged networking is widely recognized as a critical emerging
technology for the data center, and Emulex has beaten Broadcom to provide the
complete solution required to address this market," McCluney wrote.
"In our view, Broadcom is well aware that it does not have the technology
to compete due to its lack of Fibre Channel capabilityan integral component to
the technological offering."
McCluney also urged Emulex's stockholders to reject Broadcom's move to amend
Emulex's bylaws, claiming it is an attempt remove Emulex's board and appoint
Broadcom's hand-picked nominees.
"We believe these nominees, if elected, will pursue
Broadcom's self-serving agenda of acquiring Emulex on the cheap to the
detriment of Emulex's stockholders. Please understand that providing your
consent to Broadcom will increase Broadcom's leverage and provide no benefit to
you," McCluney wrote.