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W. David Gardner
May 6, 2009
2 Min Read
Broadcom's negotiations to acquire Emulex, which began quietly in December, have now become a full-fledged hostile bid.
The company on Wednesday reported it will take its offer directly to Emulex's stockholders after Emulex management turned down the acquisition overtures.
Broadcom said its $764 million tender offer for the smaller company will expire on June 3. Broadcom offered $9.25 a share for its Orange County, Calif., neighbor. Emulex stock was trading at $10.75 in early trading Wednesday -- an indication that Broadcom might have to pay a premium to its offer, if it's successful in its bid.
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 statement, Emulex said it "will review Broadcom's consent solicitation and urged stockholders at this time not to take any action on the consent solicitation. The Emulex board will make its recommendation on the tender offer and respond to the consent solicitation in due course."
Earlier, Emulex complained that Broadcom's $9.25 offer was too low and added that the offer was "opportunistic" and "timed to take advantage of a depressed stock price." The two companies have traded public salvos over the price of Emulex stock, with the latter noting that its stock has traded as high as $14.74 in the past year and with Broadcom noting that its $9.25 offer represented a 40% premium over the price of Emulex stock when the offer was made.
Broadcom CEO Scott McGregor has said Emulex's Fibre Channel storage networking solutions would be a nice fit with Broadcom's Ethernet offerings. Emulex board chairman Paul Folino has countered that Emulex has been successful on its own and has been building a strong position in the network convergence market.
Broadcom recently won a hard-fought battle with Qualcomm over intellectual property, collecting $891 million in that settlement.
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