Costa Mesa? Emulex Corp. on Friday rejected for the third time Broadcom Corp.? hostile $764 million takeover bid for the maker of electronics for data storage networks.
The rejection comes after Broadcom on May 5 went around Emulex? directors and went directly to its shareholders with the offer.
Broadcom, a maker of chips for servers, networking gear, consumer electronics and wireless phones, stuck with?nd didn? raise?ts offer.
Broadcom gave Emulex until June 3 to respond to its offer.
Emulex? board once again unanimously rejected the deal, calling it ?rossly inadequate?and ?pportunistic.?
The company again emphasized that the offer ?ignificantly undervalues Emulex? long-term prospects.?
Broadcom on Friday responded to Emulex rebuffing its bid, and again reached out to its shareholders.
“Emulex shareholders deserve the right to be heard on the merits of Broadcom? proposal,” the company said in an e-mailed statement.
Broadcom first approached Emulex in December and went public with its offer on April 21.
The hostile bid has made waves in Orange County? technology industry, as it involves some of the sector? best known names?roadcom? Henry Samueli and Chief Executive Scott McGregor, and Emulex? Paul Folino and Jim McCluney.
The bid has sparked a war of words between Broadcom and Emulex over their 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? McCluney has been touting the company? design wins as the main reason for Broadcom? aggressive move for a buyout.
Broadcom? McGregor was unimpressed, saying in a letter to Emulex? board a few weeks ago that Emulex ?as failed to demonstrate an ability to convert design wins into either revenue growth or market share.?p>Broadcom again on Friday called out Emulex on its track record.
“We believe Emulex shareholders have a very clear choice between the attractive premium, all cash, highly certain value we are offering and Emulex? track record of underperformance,” the company said.
Emulex? Chief Operating Officer Jeff Benck on Friday reiterated the company? stance.
?hose design wins don? mean revenue overnight, but they speak to future growth potential,?Benck said. ?hese wins are the key first step in putting a stake in this new converged networking space. The notion that they won? mean real revenue is bunk. Clearly the industry has taken notice and Broadcom has as well.?p>The ball is now back in Broadcom? court.
Many industry watchers say the Irvine-based chipmaker will have to up its bid if it wants Emulex.
?hile the offer is reasonable, the key is Emulex? board accepting it, which may require more negotiations and a higher bid,?said Randy Abrams, an analyst at Credit Suisse Securities LLC in New York.
Investors have driven up Emulex shares to a market value of $886 million at early afternoon New York trading?6% more than Broadcom? offer.
FBR Capital Markets & Co. analyst Craig Berger said he doesn? think a deal will happen for less than $910 million, with $990 million being the high end.
Benck didn? say if Emulex? board would entertain a higher offer from Broadcom.
?he board has the responsibility to consider all offers and consult their advisers,?he said. ?t this point it looks really opportunistic from the board? perspective.?enews_Column=-1
