SAN FRANCISCO—Broadcom Corp. said Tuesday (May 5) that its wholly owned subsidiary, Fiji Acquisition Corp., has commenced a $764 million tender offer for all outstanding shares of Emulex Corp., one day after Emulex's board rejected the offer as too low.
Broadcom (Irvine, Calif.) said it filed a preliminary consent solicitation statement to amend Emulex's bylaws to allow stockholders to call a special meeting.
Under the terms of the offer, Emulex stockholders would receive $9.25 net per share in cash—less any applicable withholding taxes and without interest, Broadcom said.
Broadcom said the offer price represents a 62 percent premium to Emulex's average stock closing price for the 30 trading days prior to the offer to acquire the company on April 21.
On Monday, Emulex said its board of directors unanimously rejected the $764 million offer from Broadcom, saying the board determined that the proposal significantly undervalues Emulex and is not in the best interest of company stockholders.
Broadcom's push to acquire Emulex (Costa Mesa, Calif.) is seen as a move to bolster the company's prospects at a time when data centers are trying to save money by consolidating today's separate network and storage traffic over future merged Fibre Channel over Ethernet networks, and system makers are trying to save costs by buying networking boards with a complete software stack.
Broadcom is the leader in the market for Ethernet chips for servers at the Gbit generation, but it has no shipping Fibre Channel chips or software or board-level products.
In a statement Tuesday, Scott McGregor, Broadcom president and CEO, said Broadcom was disappointed that Emulex's board rejected his company's proposal and that the company would prefer a negotiated settlement with Emulex rather than pursue a hostile takeover.
"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. "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."
The Emulex board has taken steps, including the adoption of a "poison pill" and creation of bylaw amendments, to block a possible takeover, McGregor said.
Shares of Emulex closed at $10.37 in Nasdaq trading Monday and were trading at $10.75 in morning trading Tuesday following Broadcom's announcement of the commencement of the tender offer.
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