UPDATE: Emulex Rejects Increased Broadcom Bid
July 09 2009 - 9:08AM
Dow Jones News
Emulex Inc. (ELX) Thursday rejected Broadcom Corp.'s (BRCM)
increased $912 million takeover offer, adding that the bid still
undervalued its longer-term prospects.
Emulex shares were recently down 13% to $8.45, suggesting
investors aren't expecting any higher offers. Chip maker Broadcom
previously said its latest bid represented the best offer it
intends to make.
Broadcom has been pursuing a takeover of Emulex since late last
year, raising its bid 19% last month to $11 a share. After
attempting a hostile takeover following Emulex's rejection of its
earlier $9.25 a share bid, Broadcom raised the offer, dropped a
lawsuit against Emulex and ended an attempt to replace its
board.
Also Thursday, Emulex said its fiscal fourth-quarter results
came in at the high end of its April projections, citing strong
operational performance.
Emulex said its board has concluded the new offer "is not in the
best interests of Emulex and its stockholders."
Broadcom didn't respond immediately to a request for
comment.
Throughout the acquisition struggle, Emulex and Broadcom sparred
over the extent to which Emulex would grow revenue based on
forthcoming business resulting from Emulex's networking technology
for data centers.
Emulex argued it had won current agreements with customers to
use its technology at the expense of Broadcom's products. For its
part, Broadcom questioned the extent to which these design wins
would translate into growth for Emulex.
The takeover battle grew increasingly hostile, with Emulex and
Broadcom both filing lawsuits related to the deal. But due in part
to Emulex's shareholder-rights provision, often known as a "poison
pill," it was unlikely that Broadcom would succeed in acquiring the
company without the consent of Emulex's board.
Meanwhile, Emulex, which makes computer-data-center technology,
sees results at the high end of an April forecast that was below
analysts' then-expectations. That view was earnings, excluding
items, of 1 cent to 5 cents a share on revenue of $73 million to
$80 million.
The earnings estimate excludes a host of costs including
expenses related to the Broadcom bid. Including the costs, Emulex
will report a loss for the quarter ended June 28.
Broadcom shares were inactive premarket. They closed Wednesday
at $23.35.
-By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155;
jerry.dicolo@dowjones.com
(Tess Stynes contributed to this report.)