Broadcom Corp. has sweetened its offer for Emulex Corp., jacking up its bid 19 percent as part of a concerted effort to win the support of Emulex's management and board of directors.
Broadcom, which on April 21 first offered to pay $9.25 per share for Emulex, said it has also agreed to terminate a lawsuit it instituted against Emulex and will stop soliciting shareholders to change the company's bylaws, a move it initiated after encountering stiff management opposition to the acquisition offer.
The Irvine, Calif.-based communication IC vendor appears to have concluded it would not be able to win enough support from Emulex' shareholders after the management voiced strong objection to the offer, contending that the bid was too low.
In a letter sent to Emulex's board of directors, Broadcom president and CEO Scott McGregor expressed hope the two companies can proceed with discussions over the acquisition offer in a friendlier manner.
"We hope this new approach will lead to a mutually beneficial dialogue, and ultimately, to a friendly transaction," McGregor said in the letter. "The arguments in favor of this are combination are substantial. Together, the talented employees of our two companies could accelerate the convergence of Ethernet and Fibre Channel."
"Broadcom's technology, scale, track record of execution, and highly successful history of acquisitions, along with Emulex's considerable strengths today would make a terrific combination for our combined employees and our customers," McGregor added.
Broadcom's renewed offer for Emulex now totals $912 million, according to the company, and represents a "66 percent premium to Emulex's closing stock price on April 20, 2009, the day before Broadcom announced its initial offer." The company hinted it does not intend to further raise the offer and has extended the offer deadline until July 14.
Emulex in a statement said it will review Broadcom's revised offer and "make its recommendation to stockholders on the revised tender offer in due course." The company advised Emulex shareholders not "to tender any shares into the revised offer pending the board [of directors] recommendation."