Broadcom said July 9 it was dropping its $909 million takeover bid for converged networks developer Emulex. Broadcom decided to cease its efforts after the Emulex board rejected a sweetened offer June 26 that boosted the original takeover bid from $9.25 a share to $11 per share. Emulex characterized both bids as lowball offers in a down market.
"Although we were unable to negotiate an expeditious and friendly transaction at a price that makes sense to us given the expectations set by the Emulex board, there are other value-creating alternatives that we will now turn our attention to as we position Broadcom to capitalize on the emerging opportunities in the converged enterprise networking markets," Scott McGregor, Broadcom's president and CEO, said in a statement.
Earlier on July 9, the Emulex board rejected Broadcom's offer.
"Throughout our review of Broadcom's offers, the board has been focused first and foremost on serving the best interests of Emulex stockholders," Paul Folino, Emulex's executive chairman, said in a statement. "We unanimously believe Emulex will deliver significantly more value than Broadcom's revised offer through the company's rapidly developing converged networking business and solid execution in our host server and embedded storage markets."
Folino added that while Emulex is confident it can go its own way, the company would give full consideration to a "bona fide offer from any party that reflects the full value of the company."
Broadcom's original $9.25 per share represented a 40 percent premium over Emulex's April 20 closing price of $6.61 per share. Throughout the takeover bid, Broadcom maintained that the offer was not a hostile takeover bid but filed a lawsuit to block a poison pill that the Emulex board approved. In addition, Broadcom also sought a preliminary consent solicitation statement from Emulex's stockholders to amend Emulex's bylaws to allow stockholders to call a special meeting of stockholders.
After Broadcom said it was no longer pursuing Emulex, shares of Emulex fell 13 percent to $8.35 per share.
Broadcom said it does not expect that the conditions to close its tender offer will be satisfied by the Broadcom-imposed deadline of July 14. Broadcom said it does not intend to amend any of the conditions. The company said it will not accept for payment any shares that have been tendered and will return those shares as promptly as practicable after the tender offer expires.