A major shareholder of networking equipment maker Emulex Corp. has called on the Costa Mesa-based company to make changes to its board or consider a sale on the heels of its $130 million acquisition of Endace Ltd.
New York-based Altai Capital, which owns about 5.3% of Emulex, called the deal for Endace “perplexing” and also urged the company to consider a stock repurchase.
• Headquarters: Costa Mesa
• Business: Networking equipment
• Founded: 1979
• Ticker symbol: ELX (NYSE)
• Fiscal 2012 revenue: $501.7 million
• Recent earnings: $5.6 million for Q4
• Market value: About $584 million
• Notable: Closed $130 million buy of New Zealand-based Endace Ltd., major shareholder calls for board changes or sale
Altai Chief Executive Rishi Bajaj, in a letter to Emulex counterpart James McCluney, said the company should add board members with a “greater economic stake” in Emulex or consider a sale.
Emulex declined to comment.
The company earlier this month announced it acquired 89% of New Zealand-based Endace, which makes network analytics software and provides reliable, ultrahigh speed network access switching.
Emulex designs and makes networking equipment that connects storage, servers and data centers.
Endace’s technology is geared to record, visualize and monitor network traffic.
Emulex used about 60% of its cash on hand for the purchase—one of the priciest in its 34-year history.
It has seen another investor increase its stake in the company in recent months.
Late last year a New York hedge fund with a history of high-profile sales and acquisitions in the technology sector became Emulex’s largest investor. Elliott Management Corp. boosted its stake in the company past 11%, taking an additional 1.3% stake, according to regulatory filings.
Irvine-based chipmaker Broadcom Corp. tried to buy Emulex for $764 million in 2009, but its hostile bid was rejected.
Emulex shares fell slightly late last week to a market value of about $584 million.
—Chris Casacchia
