In a continuation of a month-long war of words, Broadcom Corp. fired back at Emulex Corp. on Wednesday by urging the company’s shareholders to disregard repeated requests by management to ignore takeover appeals by the Irvine chipmaker.
Broadcom again appealed to Emulex stockholders to give the green light to a special shareholder meeting to discuss Broadcom’s $764 million bid to buy the Costa Mesa-based maker of electronics for data storage networks.
Broadcom is seeking a meeting to propose changes in Emulex’s bylaws that would allow shareholders to go around the board of directors and even replace board members altogether with ones open to its offer.
In a statement, Broadcom Chief Executive Scott McGregor reiterated his reasons why Emulex shareholders should consider a buyout.
He once again questioned Emulex’s standalone prospects and presented several arguments as to why a deal would have significant advantages. McGregor also criticized Emulex’s recent attempt to undermine Broadcom’s credibility in a lawsuit filed Monday.
“The Emulex board has, again, refused even to discuss our compelling offer and instead has erected sweeping structural defenses,” McGregor said in a statement. Emulex has also resorted to costly, mudslinging litigation that is wholly irrelevant to our offer. These actions demonstrate that the Emulex board is unlikely to enter into legitimate negotiations toward a transaction in the stockholders’ best interest unless Emulex stockholders take action. McGregor also implied that Broadcom may back out if Emulex continues its adversarial stance.
“Without consent for Broadcom’s proposals, Emulex stockholders may be denied the opportunity to act until the annual stockholder meeting, by which time Broadcom could decide to pursue an alternative path,” he said.
McGregor for the first time made an appeal directly to Emulex workers.
“We want our message to the employees of Emulex to be very clear: We respect them highly, we value their talents and their energy, and we believe a combined company has the potential to offer outstanding opportunities,” he said. “Broadcom has an excellent track record of recognizing and rewarding valuable employees who come to us through acquisitions.” Broadcom announced a separate Web site specifically geared toward gathering information and answering questions related to its buyout bid.
A spokesperson for Emulex declined to comment for this story but said the company is likely to prepare its own response.
Broadcom’s latest effort to reach out to shareholders comes after the two companies have traded barbs in the public eye in recent weeks over a rivalry for customers for a new technology that promises to bring the speed of specialized data networks to everyday networks of servers and desktop computers.
Emulex’s Chief Executive Jim McCluney has been touting the company’s design wins as the main reason for Broadcom’s aggressive move for a buyout.
Broadcom has taken digs at Emulex’s projections for future sales growth for the new technology and pointed out its poor performance in recent quarters.
Emulex’s board rejected Broadcom’s advances for the third time on May 15.
That’s 10 days after Broadcom went around Emulex’s directors and went directly to its shareholders with the offer.
Emulex’s board has repeatedly characterized the deal as grossly inadequate and opportunistic.
Broadcom first approached Emulex in December and went public with its offer on April 21.
