Broadcom Drops Emulex Acquisition Effort

Broadcom has dropped its hostile bid to acquire Emulex after the latter firm's board of directors unanimously rejected the bid.

Emulex said Broadcom's $912 million bid "significantly" undervalues the company while Broadcom said it had made its "best offer" and added that it would turn its attention to "other value-creating alternatives" in converged enterprise networking markets. Emulex stock dropped on the news.

At the same time, Emulex said some of its new product initiatives were bolstering the firm's future outlook and a preliminary report of its fourth quarter financial results indicated figures for the period would come in at the high end of its guidance.

"Underscoring the success of our strategic initiatives, we recently secured two new tier-one 10Gb/s Ethernet OneConnect Converged Network Adapter design wins, adding to the 12 wins that we disclosed in May," said Jim McCluney, Emulex' president and chief executive officer, in a statement. "These new design wins further validate our projections of $600 million in revenue."

Broadcom had held informal talks late last year with Emulex about an acquisition, but those discussions went nowhere. In April, Broadcom launched its unsolicited bid and the negotiations turned increasingly nasty as Emulex made it clear it didn't want to be acquired by Broadcom and adopted poison pill defenses and sued Broadcom citing older transgressions. Broadcom upped its offer to $912 million, but it wasn't enough to move Emulex.

No alternate bidders materialized, although Emulex said it would entertain offers from any party that reflect what it called "the full value of the Company."

Meanwhile, a trial between the two firms in Delaware Chancery Court has been postponed.

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