Noting that its board of directors unanimously turned down the offer, Emulex said the Broadcom offer "significantly undervalues Emulex" and doesn't take into consideration the fact that Emulex has recently beat Broadcom and other competitors in winning tier-one OEM product contracts. Emulex makes storage networking products for Intel-based server clusters. Broadcom specializes in semiconductors for VoIP, broadband communications devices, enterprise wireless networking, and Wi-Fi integrated circuits.
In a letter Monday to Broadcom CEO Scott McGregor, Emulex board chairman Paul Folino touted Emulex products and services.
"As you are well aware, Emulex is successfully building a leadership position in the rapidly expanding network convergence market ...," Folino said in his letter. "Our leadership in network convergence enables us to expand into new product categories that have significantly increased our value to OEMs and will more than double our current addressable market."
The two companies have been in tense acquisition talks dating back to December. In Broadcom's latest offer late last month, Broadcom said an acquisition of Emulex would bring Broadcom's Ethernet offerings and Emulex's Fibre Channel storage networking products to enterprise networks.
Emulex countered in its letter to McGregor that it has been developing and successfully marketing a range of new products that includes its OneConnect Universal Converged Network Adaptor platform and OneCommand convergence management framework.
Both companies used statistics about Emulex stock in attempts to buttress their stands on the proposed acquisition. When it made its acquisition offer public last month, Broadcom said its offer of $9.25 a share for Emulex represented a 40% premium to the price of Emulex stock when the offer was made. In its rejection letter Monday, Emulex noted that its stock has traded as high as $14.74 in the past year. In early trading Monday, Emulex stock was listed at $10.64 a share -- an indication that Wall Street traders expect the acquisition negotiations to turn hostile and Emulex stock to be driving up.
Broadcom won't have any trouble paying cash for the acquisition, if it comes to pass. The company has more than $1.5 billion in cash and in recent days won $891 million in intellectual property litigation against Qualcomm.
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