Costa Mesa? Emulex Corp. took a shot at Broadcom Corp. in a lawsuit filed Monday in Santa Ana federal court.
The maker of electronics for data storage networks highlighted the legal troubles of former Broadcom executives and cofounders Henry Nicholas and Henry Samueli in its latest effort to fight Broadcom’s $764 million hostile buyout bid.
?mulex believes its stockholders should be fully and fairly informed about the history of the company,?it said in a statement.
In a 60-page complaint, Emulex attempts to undermine Broadcom Chief Executive Scott McGregor? efforts to persuade Emulex shareholders to approve a buyout, despite repeated recommendations by Emulex directors to reject the offer.
Emulex accuses Broadcom of ?ttempting to obtain the assets of Emulex on false pretenses,?according to the lawsuit. ?t is also attempting to harm Emulex? business by making representations to Emulex? current and prospective customers.
Emulex calls out Broadcom by way of Nicholas?indictment on drug and fraud charges, which was made public about a year ago.
The complaint quotes from the indictment, which paints a lurid picture of a CEO gone wild, with allegations of drug use and other illegal activities.
Nicholas, along with former finance chief Bill Ruehle, pleaded not guilty to the fraud charges. They are set to go to trial later this year and early next.
Ruehle isn’t involved in the separate Nicholas drug case.
The Emulex suit also names Samueli, who last year stepped down as chairman and chief technology officer after the Securities and Exchange Commission sued him over his involvement in granting backdated stock options.
In September, a judge rejected Samueli? deal to plead guilty to one federal charge of misleading investigators about his role in granting stock options.
The SEC civil suit against Samueli is on hold until after the trials of Ruehle in October and Nicholas in 2010.
Emulex? complaint seeks to portray Broadcom as ?ishonest enterprise?because of its recent history of stock options backdating.
Broadcom paid more than $2 billion in 2007 to fix misdated options, the largest bill of any of the roughly 150 companies investigated.
?mulex stockholders and employees understand they are not dealing with an honest enterprise,?the lawsuit showed. ?he breadth and depth of Broadcom? pattern of civil and criminal violations require that all of Broadcom? statements be viewed with mistrust.?p>In a statement on Monday, Broadcom responded to the lawsuit and took the high road.
?e are disappointed Emulex would confuse the issue of a highly attractive, all cash offer with items such as these. None of the historical claims in this suit is relevant ?We think that Emulex shareholders deserve better than mud slinging and scorched-earth tactics designed to block shareholders from their ability to accept our offer.?
Broadcom said that it continues to ?emain open to holding substantive discussions to bring this transaction to a close.?
The lawsuit comes after the two companies have traded barbs in the public eye in the past month 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? Chief Executive Jim McCluney has been touting the company? design wins as the main reason for Broadcom? aggressive move for a buyout.
Broadcom has taken digs at Emulex? projections for future sales growth for the new technology and pointed out its poor performance in recent quarters.
Last week, McCluney encouraged shareholders not to accept any communications from Broadcom.
Emulex? board rejected Broadcom? advances for the third time on May 15.
That? 10 days after Broadcom went around Emulex? directors and went directly to its shareholders with the offer.
Emulex? board has repeatedly characterized the deal as ?rossly inadequate?and ?pportunistic.?
Broadcom first approached Emulex in December and went public with its offer on April 21.
Broadcom? shares were up nearly 4% in early afternoon New York trading on a recent market value of about $13 billion.
Emulex? shares slumped 5% on a market value of roughly $860 million.
