Emulex board rejects Broadcom’s $764 million Offer
Spurned by the board of Emulex Corp., Broadcom Corp. said Tuesday that it would take its $764-million cash offer directly to the Costa Mesa company’s shareholders through a tender offer.
Irvine-based Broadcom also said it filed papers with the Securities and Exchange Commission seeking a special meeting of stockholders to repeal a “poison pill” that Emulex’s board adopted in January to thwart hostile takeover attempts.
The two Orange County companies make networking equipment for servers and data centers.
Broadcom Chief Executive Scott McGregor has contended that the two should combine their technologies to jointly go after a burgeoning market for universal adapters that can be used to connect server computers to massive storage centers.
After failing to get Emulex’s board to the negotiating table in December, Broadcom announced its unsolicited buyout offer on April 21. Emulex’s board on Monday formally rejected the bid, valued at $9.25 a share, saying it was not enough.
McGregor, in extending the offer to shareholders, said the deal represented a 40% premium over Emulex’s closing share price the day before Broadcom made its bid.
“The Emulex board’s response on Monday and its continued unwillingness to engage in discussions with Broadcom are clearly not in the best interests of either its stockholders or its customers,” McGregor said in a statement. “This intransigence could cause needless delay in efforts to combine our two companies, leading to further deterioration of Emulex’s market share and stockholder value.”
Investors may have a different opinion. Emulex’s shares gained 2 cents to $10.77, 16% above Broadcom’s offer.
Emulex, in a statement, said its board would “review the tender offer” and issue a recommendation to its stockholders within 10 business days. In the meantime, it advised shareholders to “take no action” in response to Broadcom’s call for a special meeting to repeal the company’s poison-pill provision.
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