DOW JONES NEWSWIRES
Emulex Corp. (ELX) said Monday that its board rejected Broadcom
Corp.'s (BRCM) unsolicited $764 million takeover bid, saying the
$9.25 a share offer "significantly undervalues" the networking
technology maker's long-term prospects.
In a letter to Broadcom board's, Emulex's board said the offer
lowballs the company, particularly regarding network convergence
technology, and that it is timed to take advantage of the company's
depressed stock price. From August to early March, shares tumbled
from $14 per share to $4.50 per share, a 10-year low.
The stock has been trading above Broadcom's offer price, and was
down 3.1% premarket at $10.05. Broadcom gained 1.9% to $23.50 per
share.
Emulex President and Chief Executive Jim McCluney said the
company is poised to gain market share "at the expense of Broadcom
and our other competitors."
Emulex had rejected prior advances and in January installed
"poison pill" protections against hostile takeover offers.
A deal for Emulex would allow Broadcom to sell another
technology used in storage networking. Broadcom sells ethernet
networking equipment for the connections in company data centers;
meanwhile, Emulex - and rival Qlogic Corp. (QLGC) - focus on
technology known as fibre channel.
Ethernet is expected to replace fibre-channel technology in
storage networks; however, fibre-channel remains the storage
network standard. Analysts say the ability to sell both ethernet
and fibre-channel could give Broadcom a strategic advantage when
the two technologies converge.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com