Emulex once again rejects Broadcom's $764 million hostile bid

16 May 2009

Emulex, the leader in converged networking solutions for data centres, yesterday said that its board of directors has unanimously recommended the company's stockholders to reject Broadcom's  $764-million hostile cash offer.

Emulex said in a statement that the Broadcom offer significantly undervalues Emulex's long-term prospects and does not adequately compensate stockholders for their shares.

Last month, Broadcom, the supplier of integrated circuits for broadband communications, had renewed its bid to acquire Emulex by taking its unsolicited offer of $9.25 per share cash tender, directly to Emulex shareholders, after having been rejected by the company in December 2008. (See: Broadcom launches $764-million hostile bid for Emulex)

The first time when Irvine, California-based Broadcom approached Emulex in December, the chip maker was sent packing by the board of Emulex saying that the company was not for sale. Emulex also immediately amended the company's byelaws introducing poison-pill defences that make it frightfully expensive for any hostile takeover.

Broadcom, then filed a suit in the Delaware court against Emulex and its board for amending the bylaws of the company since the amendment can be done only by shareholders holding more than 66 per cent of outstanding shares of the company.

Emulex said ''After a thorough review with its financial and legal advisors, the board determined that the tender offer significantly undervalues Emulex's long-term prospects and is grossly inadequate, and that the offer and related Broadcom consent solicitation are not in the best interest of Emulex stockholders. The Board therefore unanimously recommends that Emulex stockholders not tender their shares into the offer or sign any gold consent cards received from Broadcom.''