June 30th, 2009
Broadcom ups hostile offer for Emulex; Sets July 14 deadline
Broadcom raised its hostile takeover bid for Emulex from $9.25 a share to $11 a share and told its target that it shouldn’t get too cocky about its future prospects. The message from Broadcom: Without a buyout Emulex is unlikely to see $11 a share for a while.
In addition, Broadcom gave Emulex a July 14 deadline to make its decision on the offer, which is now worth $912 million (statement). The deadline is much needed since this saga has dragged on. Emulex advised shareholders to take no action on the Broadcom bid.
Among the key points:
- Broadcom says that its offer is a 66 percent premium to Emulex’s April 20 price the day before its original offer.
- Broadcom says that Emulex shares would be about $7.11 without its offer.
- Broadcom won’t challenge Emulex’s poison pill provisions anymore.
And the “come to your senses already” quote from Broadcom CEO Scott McGregor:
It remains unclear to us that Emulex is likely to achieve value for its shareholders greater than our significantly enhanced cash offer within a reasonable period of time on a standalone basis. We hope you and your Board will balance your optimistic view of your prospects to be the dominant player in the CNA market by FY2012 with a realistic assessment of the risks associated with achieving your projections, the intense competition you will face in the market, and the headwinds you will encounter from a core market that is in long term decline.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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