Emulex Corp.'s (ELX) board rejected a $9.25-a-share takeover bid from Broadcom Corp. (BRCM) on Monday in what many expect is the opening round of a lengthy acquisition battle.

Emulex, which makes the networking technology used to connect the servers and equipment in company data centers, said the roughly $764 million offer undervalues its long-term prospects. The company added it has "significant new unannounced design wins," with top manufacturers, which are expected to be multi-million dollar, multi-year deals, said President and Chief Executive Jim McCluney.

Emulex shares, which have traded above Broadcom's offer price since the offer was made public, were recently up 2.8% to $10.66, suggesting investors expect a higher bid.

Broadcom shares were recently up 2.2% to $23.57. The company said it is currently evaluating its options in regards to the rejected offer.

Analysts expect Broadcom to come back with a revised bid.

"There is definitely room for them to raise the offer," said Robert W. Baird analyst Tristan Gerra, adding they could pay up to "a few dollars" more per share. "This is pretty much what we have expected."

Broadcom can likely afford to raise the bid and still have the acquisition add to earnings within the first year, Gerra said.

Meanwhile, Stifel Nicolaus analyst Cody Acree said Broadcom may raise the price into the $12- to $13-a-share range.

A deal for Emulex would allow Broadcom to sell another technology used in storage networking, known as fibre-channel, which is currently the standard in data centers. Emulex and rival Qlogic Corp. (QLCG) dominate this market, but most expect that fibre-channel products eventually will be integrated with the ethernet networking gear Broadcom sells.

While ethernet likely will replace fibre-channel technology in storage networks, companies are moving to sell products that combine the two technologies.

And the ability to sell both ethernet and fibre-channel could give Broadcom a strategic advantage when the two technologies converge.

Emulex said it has already released a product that combines ethernet and fibre-channel and has inked deals with major manufacturers to implement it.

"We are displacing (Broadcom) at some of their most major customers," said McCluney, adding "We are arguably a year ahead of the rest of the market."

However, the company hasn't yet made these design wins public.

In a letter to Broadcom's board, 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.

Broadcom approached Emulex in December about a possible tie-up, but according to Broadcom Chief Executive Scott McGregor, Emulex wasn't interested in talking.

"They basically said, 'No, the company isn't for sale,'" McGregor said last month during a conference call.

In January, Emulex adopted a revised "poison pill" antitakeover measure to replace one set to expire that month.

-By Jerry A. DiColo, Dow Jones Newswires; 201-938-5670; jerry.dicolo@dowjones.com

(Tess Stynes contributed to this report)